The Concept of The Reverse Mortgage

You may have heard about a mortgage that's becoming more and more popular. It's called a reverse mortgage. Now here is how these work. A reverse mortgage you have a loan against your home only difference between this loan and the traditional mortgages is with a reverse mortgage you are not required to make payments or pay the loan back, that is as long as you are living in that house. In essence what you are doing is utilizing the equity in your home by converting the value of your house into cash on hand that you probably need. The great thing about this you don't have to make payments or move from your home.

One may ask well how does this work exactly? What mechanism is in place that allows you to receive the cash you are seeking through a reverse mortgage? Actually there are several methods you can utilize to start receiving your cash. First of all you, you can receive it just like the lottery winners receive their cash , all at once in a lump sum pay out if you feel this method would best help you meet your objectives.

Another way to receive your cash from a reverse mortgage is through monthly pay outs. Every month you would receive a payment for the established amount. A third option centers around what is called a credit line account and this method basically allows you to choose and decide exactly how much is to be paid to you and when it is to be paid to you. This method appears to be the most flexible because you are able to increase the monthly payout if you find that you have some usual expenses that you had not counted on. Maybe there are some taxes that have come due, or you need emergency repairs to your home or your automobile. Just maybe there is some tuition that needs to be paid for a family member. Whatever the case you are able to cover it with this very flexible option. Still another option at your disposal is putting together a combination of these options.

With the traditional mortgage your credit and income and debt to income ratio and analysis are all scrutinized to see if you qualify for a mortgage. However with a reverse mortgage there is not a minimum income because you don't have to make payments. Quite frankly you could actually have no source of income and still receive a reverse mortgage. So you ca probably see the advantages of this type of mortgage. Another excellent point is with traditional mortgages you can lose your home by not making the payments. We are all aware of what's going on in the mortgage and housing industry , as it pertains to adjustable rate mortgages and sub prime lending. A lot of people have lost or are losing their homes because they were place in a situation that prevented them from paying their mortgages.

With a reverse mortgage you cannot lose your home because you did not make your payments simply because there are no payments to make to a lender. A reverse mortgage again is a loan against your home and as you receive the advances you are increasing your debt and lowering the amount of equity in your home.


To Your Great Success

Mel Richardson
www.visionstarenterprises.com
melvin21@msn.com