The economy is at it’s worse in years. Unemployment is on the rise. Seniors lose their jobs, banks pay little or no interest and savings have diminished. Seniors who are still employed find their take-home pay reduced due to the lack of business at their place of employment.
Finding it hard to pay the bills seniors seek help by applying for a Reverse Mortgage for the necessary funds needed to survive. Other seniors apply for a Reverse Mortgage for traveling to far away places, updating their homes or buying a new car or motorcycle.
Seniors applying for a Reverse Mortgage find the process simple as it entails only few requirements. The banks will need to know the borrowers age, the total dollar amount of unpaid loans and the equity in the home.
Home Equity Loans are not granted freely. Seniors learn the obligations that must be met before the loan is granted. Seniors applying for a Reverse Mortgage must agree to keep the house in good condition; mow the lawn, trim the shrubs and remove and replace all dead flowers.
A Home Equity Loan does not release the borrower from paying their Home Owners Insurance and yearly taxes. Failure to upkeep the home, as written in the contract, will result in the take-over of the house by the Mortgage Company with you and your family tossed out into the street.
Prior to receiving the loan, each senior must receive counselling to understand exactly what the contract entails. Seniors who seek help by applying for a Reverse Mortgage find it wise to take a family member or friend with them to the counseling sessions.
Generally the rules are simple. (a) Understand all aspects of the loan. (b) Learn exactly what your obligations will be once you get the loan. (c) Fully understand that obtaining a reverse mortgage is not as safe as it sounds. One wrong move and the house will go into a foreclosure. Do not sign a contract unless you are fully aware of the consequences if you fail to follow the loan rules to the letter.
Recently, I read an article about a 75 year old senior who had lost her home due to a foreclosure. She was out on the street. She had lived in the house for all of her married life. Her children were born and raised in this home. Her husband had died suddenly and never bought a Life Insurance policy.
She applied for a Reverse Mortgage and received the monthly checks. However, she failed to pay what was expected of her. She stopped paying her homeowners fees and yearly County taxes.
She received warning letters but ignored them. Eventually the house was garnished due to unpaid taxes. She was now out on the street.
The Obligations Required For a Reverse Mortgage
1. Own the home and be at least 62 years of age. The mortgage must be low enough to be fully paid off when going to closing on the Reverse Mortgage loan
2. The idea of such a loan is to have the first home loan paid off. If the mortgage is too high to be paid off completely, seniors will not be granted the Reverse Mortgage Loan.
3. Monthly payments on the house are no longer necessary. The loan will not have to repaid either. The monthly check a senior receives can be used in any way and for anything they want.
4. Seniors must live in the home and be responsible for paying homeowner county taxes.
Seniors applying for a Reverse Mortgage on their home must keep their house insurance payments up to date and take care of the property. If not, their home will go through foreclosure proceedings, and the bank will take over the house. A Senior might end up, in their old age, with no place to live and no money to live on.
Never sign a contract, no matter how good it sounds, if you do not completely understand what you are signing explain and return another time.