Loans For People With Bad Credit

Financial uncertainty is a way of life for many seniors today. Their dreamed of retirement is often cut short by reality. Seniors have fixed incomes and day to day living expenses are steadily rising. They worry about the future and often ask questions at their financial institution about help to manage their finances. Income boosting alternatives are few. One way to help boost income is a Home Equity Conversion Mortgage (HECM), known as a Reverse Mortgage. Financial employees who are familiar with Reverse Mortgages can help customers by providing them with income boosting alternatives.

A source in which a home owner is made capable to convert a part of his asset into cash is termed as Reverse Mortgage. It is one more method of availing a loan, which attracts no tax and will not hamper in any way the benefits of Social Security and Medical care, which are being enjoyed. But in some cases the cash resources shall have to be kept at a minimum.

The majority of reverse mortgages are Home Equity Conversion Mortgages (HECMs), and are therefore guaranteed by the FHA. In order to help homeowners with properties that exceed FHA lending limits, various proprietary products have been created.

People who are more than 62 years of age and who hold the title of a home or some equity on the home are eligible for this Reverse Mortgage. By obtaining the Reverse Mortgage existing mortgages or liens need to be paid off immediately. Even if the current insurance or property taxes are on due they must be paid using the Reverse Mortgage money.

A reverse mortgage borrower has no restrictions on how the monies can be used. Here are common uses for these funds:

- Paying off debts, often credit cards and mortgages.

- Remodeling projects or other home improvements

- General living expenses

- Vacations and travel

- Health care costs or long term care

- Assisting children with financial obligations

- Education

- To fund hobbies

- To defray the rising cost of property taxes

The proceeds available from a Reverse Mortgage vary depending on FHA lending limit’s and other factors like borrower’s age, value of the home, and interest rates. Typically the older the borrow, the higher proceeds available. Proceeds from the loan can be paid in a lump sum, in monthly payments, or extended as a line of credit available when needed.

All loan products have origination fees and closing costs. The Reverse Mortgage also has fees and costs, but they can be paid for with the proceeds of the loan. One of the costs is the FHA’s Mortgage Insurance Premium (MIP). The great thing about the Reverse Mortgage is there are no out of pocket costs. One of the other great things is a customer is required to attend mandatory counseling sessions with a trained counselor. These Reverse Mortgage counselors are often certified by the AARP and will ensure the borrower understands the costs of the loan and any other alternatives available. A Reverse Mortgage is a non-recourse consumer loan, meaning the loan payoff can never exceed the value of the home.

Graham McKenzie is the content coordinator for a leading South African leading Homeloans and Bond Origination portal which provides access to ABSA Homeloans.

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This entry was posted on Wednesday, November 4th, 2009 at 6:33 pm and is filed under home equity loan. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.