09-15-2004, 09:15 AM
How to Use a Reverse Mortgage to Tap Into the Equity in Your Home
People who are over the age of 62 qualify for reverse mortgages -- and, as millions of baby boomers approach their 60s, they are becoming increasingly popular. Basically, a reverse mortgage allows you to borrow money against the equity in your home. As long as you live in the home, the loan gives you access to the money without making monthly mortgage payments. If you live long enough, you could theoretically pocket payments exceeding the value of the home. However, the loan must be repaid in full if the home is no longer your principal residence.
Here's how the process works:
1. You get information from a potential lender.
2. You get advice from a counselor (required; a free service).
3. You fill out an application, select a payment option, and are provided with estimated costs of the loan.
4. An appraiser determines the value and condition of your property. (You pay for the appraisal.)
5. If the loan is approved, the closing is scheduled and interest and closing costs are calculated. (Closing costs can be financed as part of the loan.)
6. You access the money according to the option you selected. (Most people take it as a line of credit.)
7. You make no monthly mortgage payments during the life of the loan.
(Source: National Reverse Mortgage Lenders Association)
People who are over the age of 62 qualify for reverse mortgages -- and, as millions of baby boomers approach their 60s, they are becoming increasingly popular. Basically, a reverse mortgage allows you to borrow money against the equity in your home. As long as you live in the home, the loan gives you access to the money without making monthly mortgage payments. If you live long enough, you could theoretically pocket payments exceeding the value of the home. However, the loan must be repaid in full if the home is no longer your principal residence.
Here's how the process works:
1. You get information from a potential lender.
2. You get advice from a counselor (required; a free service).
3. You fill out an application, select a payment option, and are provided with estimated costs of the loan.
4. An appraiser determines the value and condition of your property. (You pay for the appraisal.)
5. If the loan is approved, the closing is scheduled and interest and closing costs are calculated. (Closing costs can be financed as part of the loan.)
6. You access the money according to the option you selected. (Most people take it as a line of credit.)
7. You make no monthly mortgage payments during the life of the loan.
(Source: National Reverse Mortgage Lenders Association)