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MBA Urges Regulators To Avoid Invoking Suitability Standards
The Mortgage Bankers Association (MBA) recently made a preemptive strike against what it obviously perceives as the next threat against the mortgage industry - "suitability standards." Read more...

 

A Short Overview Of Reverse Mortgages

This short article is meant to offer you an overview of reverse mortgages.

Reverse mortgages work in a similar way to the traditional mortgages, but backwards. Instead of you paying your lender a monthly sum of money in order to stay in the house, the lender has to pay you a certain amount of money each month, and you still get to stay in the house.

Many individuals become very attached to their homes because a good portion of their life, including raising a family, have occurred in that home and it is emotionally difficult to sell it.

And since lenders are arguably the ultimate capitalists, they've come up with a solution to this problem: reverse mortgages. Reverse mortgages will allow people to convert a large chunk of the stored equity into tax-free cash without having to take on a monthly payment obligation. The home doesn't have to be sold in order to take advantage of its monetary value and you don't have to go through the process of moving since you get to stay in your home.

Reverse mortgages get their name from the payment process. Unlike a traditional home loan, the reverse mortgages will require the lender to make payments to you, isn't that grand?

You can choose to receive the money as a monthly payment for the rest of your life, as a lump sum payment or even as a credit line. It's not advisable to go for the lump sum option since home equity is usually your biggest asset, one you should be very careful with.

The amount of money you'll get out of reverse mortgages will depend on a number of factors such as the borrower's age, the overall interest rates, the appraised value of the home, the equity in it and so on all are involved in determining your options.

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