HUD Reverse Mortgage -The Facts
Anyone over the age of 62 with equity built up in their house may be able to supplement their income and create an emergency fund through the help of the Department of Housing and Urban Development. The HUD reverse mortgage a way to pull out the equity in your property to help you with your monthly bills and put aside a fund to aid in case there is an emergency. The concept of a reverse mortgage may be unfamiliar with some so an explanation may be needed.
When applying for HUD reverse mortgages the normal forms and papers relevant to a mortgage are required. An applicant needs to meet certain requirements. Among these are that the house must be occupied by the applicant and should be either a single family home or condominium with not more than four apartments. One unit has to be occupied by the applicant as his or her primary dwelling. The home must be possessed outright, or have a very small mortgage pay off which will be paid from the proceeds of the reverse mortgage. Additionally HUD requires that the borrowers go through a credit and debt counseling service. This is not a free of charge program and the cost must be paid by the applicant. If these guidelines are satisfied the application can proceed.
When approved for a reverse mortgage a home has to go through the usual procedure of appraisal involved in a typical home mortgage. The mortgage will have interest building up during its term and interest rates and valuation of the home becomes factors during the approval process.
When the mortgage loan is in place the borrower has options of receiving a monthly sum for life or for a term of years. Additionally there is an option of putting aside a fund that may be drawn down in case of emergencies, much like a home equity line-of-credit.
The mortgage is paid back at the time the owner no longer lives at the property. Pay off is in full with accrued interest. The HUD reverse mortgage may not be for everybody but does offer an opportunity for some homeowners to stay in their house during retirement.
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