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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...

 

Basics Of Reverse Annuity Mortgage Loans

The reverse annuity mortgage concept was created to allow older Americans to tap into the equity of their paid for or nearly paid for home. Homeowners receive a tax-free payment each month, and the mortgage loan is then paid when the home is sold. Before you choose a reverse annuity mortgage, make sure that you've evaluated the risks since this option can severely limit future housing plans. Reverse annuity mortgage loans come in different versions.

One of the first reverse annuity mortgage programs was developed by the HUD and is still in existence. In order to qualify you must be sixty-two years of age or older, live in the home, and have paid off your mortgage. The government will then insure your reverse annuity mortgage.

You can also choose to work directly with private lenders. Of course, you'll want to review their terms carefully to be sure that you are getting the full value of your home and not paying thousands of dollars in fees.

With both these types of reverse annuity mortgage loans you will never owe more than what your home is worth. And when and if you decide to move, the loan's principal, interest, and fees will be due. Any equity remaining from the sale of your home will be yours or can be passed onto your heirs.

The major difference between a reverse annuity mortgage and a home equity loan is when the loan balance is due. With a reverse annuity mortgage loan, the mortgage balance is due when you stop living in the residence. You won't have the monthly payments of an equity loan and with a reverse annuity mortgage loan it will be easier to qualify for the mortgage since you don't have to have income to make monthly payments.

You need to keep in mind that there are scams out there related to reverse annuity mortgage loans, so keep a look out for them and get your information from the HUD or other legitimate mortgage lenders.

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