Reverse Home Mortgage Used To Pay Off Unexpected Bills:

A reverse home mortgage can be used for several things.  First off, you can obtain a reverse home mortgage to pay off your existing mortgage and never have another mortgage payment again.  However, you will still be paying your annual home owners insurance policy, your real estate tax bill and any hoa fees that your community has.  If you own your home free and clear you can use a reverse mortgage to pay off unexpected bills .  This may include medical bills, dental bills, eye vision bills, high real estate taxes, credit card debt, home owners insurance policy, and many other items.  When paying off debt if you have enough equity in your home you can also pull out more cash to be used in whatever way shape or form you choose.

Why Obtain Cash Back?

For many people this can change your life.  A lot of people own their home free and clear which is a good thing.  However, then they are short on cash because their money is tied up in their home.  They have very little money for food, medicine, dental work, eye vision, gas, real estate taxes, home owners insurance, hoa fees, and just plain old having fun in life.  When you use the equity in your home, you now allow yourself to live your life in a more affordable style.  When you obtain a mortgage you can chose to either make a payment or never make a payment again.  If you never make another mortgage payment, your mortgage balance does not need to be paid off until the final person on title passes.  At that time, your heirs have 18 months to either pay the loan off or sell the home.  When they sell the home, the mortgage balance will be paid off first and any remaining balance will go to your heirs.  This is why many people choose the option of never making another mortgage payment again.

Loan Types:

There are a couple of different loan types.  One is where your rate stays constant for a full year.  Then on the 13th month your interest rate will increase by whatever margin is set.  The other option is a variable rate where your interest rate can change monthly.

What is the reverse process?

First someone will come out to your home and go over a proposal.  They will explain the process and show you different loan types.  If you want to continue, then you will go attend a hecm counseling class.  There is a fee for this class which is charged by all counseling agencies.  It is $125.  Once your hecm counseling class is complete then your loan officer will prepare a final loan application.  They will also come out to your home to sign all the documents.  Next, your loan will be submitted to a lender for review.  An FHA case number will be ordered as well as an appraisal.  Make sure you home does not need any repair items.  If it does, the appraiser will note them on the report.  This will then trigger the underwriter to request that you the home owner fix the repair and a final inspection appraisal will be required.  The appraisal company will charge roughly $125 to come back out to your home and inspect the repair item and draw up a final appraisal report.  Therefore, make sure you check out your home first.  If you have repair items that need to be done, do them first.  Then, have us order your appraisal.  This will save you money in the long run.  After that, the underwriter will issue a final loan approval.  Once that is done, your loan is then locked.  After that,  your final paperwork is drawn up and signing can occur.  Since this is a refinance, there is a 3 day right of recission.

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