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A Guide to Mortgage Loans for Seniors

A Guide to Mortgage Loans for SeniorsThe economy isn’t what it used to be. Times are hard. Seniors have to pay more out of pocket for health care, and their income from benefits and retirement hardly put a dent in good living standards with today’s turbulent economy. One way to get more money is by taping into the equity you have in your home. You have a few options to choose from. However, a reverse mortgage is a loan that has been designated for people 62 years of age and older to use, and investigating the process would be very beneficial. However, do not ignore the other options, such as a traditional mortgage, as it may be the better option for you.
What does a reverse mortgage do? 
A reverse mortgage allows the borrower to tap into the equity of their home without making monthly mortgage payments. This just leaves the homeowner with the cost of taxes and insurance. When the borrower is ready to sell their home the bank takes its share from the proceeds of the home’s sale, and the rest is given to the homeowner. If the homeowner passes away, the same rule applies and the leftover funds are then awarded to the borrower’s heirs.
Understanding how a reverse mortgage works is rather complex. However, new laws were put into place that define the process in straightforward, simple language. Be sure you fully understand how this loan works before pursuing one. Also, knowing exactly how much money you will be getting should be crucial to your decision-making process. By using a Reverse Mortgage Calculator you can get detailed information, and it is completely free to use.
Making calculations
This free tool estimates how much the borrower can qualify for in his or her Home Equity Conversion Mortgage (HECM) loan. The calculator will unveil every possible outcome based on each program the borrower qualifies for. The accuracy of the calculator is dead-on and it displays interest rates based on the current market. This is the very same tool that banks use to get their borrower qualification information. If you are like most people and tend to get nervous when talking to a banker about your money, you may want to crunch the numbers at home with this free, easy-to-use calculator and remove the element of surprise that you would experience from the bank. Just make sure that before talking to the bank about a reverse mortgage you look into refinancing the traditional way by working with your existing mortgage. It very well could be a better option for you.
Proceed with caution 
The reverse mortgage loan has a stigma attached to it as being risky business. In an article published by The New York Times, the author reports how Wells Fargo and Bank of America washed their hands of the reverse mortgage practice, as it is too awkward. The article states that the loans have increasingly become a riskier proposition. Banks are not allowed to assess borrowers’ ability to keep up with all their payments, and more borrowers do not have the wherewithal to stay current on their homeowners’ insurance and property taxes, both of which have risen in many parts of the country. At the same time, borrowers have been taking the maximum amount of money available, often using it to pay off any remaining money owed on the home. Yet home prices continue to slide.
Seek advice from a non-biased professional 
Your best bet is to contact a mortgage broker who helps clients qualify for this, and other loan types. Although the reverse mortgage can be risky business, it has helped thousands of people and has kept them in their home while giving them more money in their pockets to enjoy the remainder of their lives. Be diligent, and do your research, and the answer will become clear.
Image source: http://farm4.static.flickr.com/3574/3668037117_a3aea8bfcd.jpg

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