Presently senior home owners who have reached the age of 62 hold an estimated $4.3 trillion dollars of home equity. By the year 2030 seniors could hold as much as $37 trillion in home value. Aging baby boomers and seniors have accrued tremendous assets from savings and retirement funds and hugh equities from the value of their homes. They also have many concerns about their increasing health costs, and funding their plans for retirement. After these concerns they have other pressing issues such as financially helping their children and grandchildren. Home prices have increased well beyond the reach of many home buyers, whether they are the "Boomer/Seniors" children or grandchildren. Home owners with all this accumulated equity are in an enviable position. They have an opportunity to make some well planned decisions about how they will allocate these monies. They can decide to spent as much as they want or need. They could also decide to financially help their children and grandchildren, then after they pass away leave what is left in their estate. Their heirs will then benefit.
You may be asking yourself now, how can they spend the equity in their home? What if they can't afford to pay for a second home loan. What if they don't want to acquire a home equity line of credit. These loans require repayment. If they are already retired and living on a fixed income then they probably can't afford to refinance. Or after all these years they have payed off the mortgage and now the furthest thought in their minds is an act placing themselves back into debt. We will address that issue later.
Other concerns and issues that "Boomers/Seniors" are faced with include helping their children and grandchildren with money needs, be it housing, or education costs, or just the cost of living. The ability to buy a home similar to the first home you purchased has now exceeded the financial reach of your children and grandchildren. You may have been seriously thinking about how can you help them. A down payment, a years' tuition, some pressing bills that may have accumulated and your children or grandchildren need help. How can you help and ot have to drain your bank account or retirement fund. Those monies can't be replaced. What about the equity in your home. The fear of taking equity out of your home and having to repay the debt can be terrifying. The fear of losing your home to foreclosure for failure to service your debt can be so unsettling that it prevents you from offering help to your children. A reverse mortgage may be the best way to help your children or yourself if the need arises.
A reverse mortgage is a particular type of home loan that allows the homeowner to tap into a portion of the equity in the home, however unlike a traditional mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. The U. S. Department of Housing and Urban Development has created a reverse mortgage that provides these benefits and it is federally insured. The borrower can recieve the funds from this type of mortgage in different ways. There are five payment options, and they are: Tenure, Term, Modified Tenure, and Modified Term, and Line of Credit. The Tenure option allows the borrower to receive equal monthly payments for as long as they continue to use the property as their primary residence. The Term option offers equal monthly payments for a set monthly period. Modified Tenure offers a combination of the Line of Credit option with Tenure, meaning they have a line of credit when payments are needed as well as monthly payments. Modified Term is similar to the Modified Tenure in that it provides a line of credit along with monthly payments for a fixed period. And last is the Line of Credit that offers payment when needed until the line of credit is exhausted.
No one gets anything for free. How is this type of loan repaid? First you must qualify for the loan. You must be 62 years or older. The borrower(s) must have an existing low mortgage that can easily be repair by the reverse mortgage or they must own the home, and they must live in the home. They must attend a counciling session approved by HUD prior to obtaing the loan. The amount that can be borrowed by a reverse mortgage is determined by the age of the borrower, the value of the home, and the current interest rate. There are no payments to be made to the lender of the mortgage as long as the borrower remains in the home as their primary residence. A borrower will never have their home taken away from them even if they outlive the value of the loan. You can never owe more than your home is worth so you do not need to repay the loan as long as you live in the home. The amount of money that can be received each month depends on a few factors. The age of the borrower, the interest rate at the time of the loan origination, and the appraised value of the home are the factors determing how much you can borrow. Borrowers do worry about being able to leave their home and its value to their estate. Borrowers will repay the cash received as well as accrued interest and other fees to the lender when the borrower no longer used the home as their principle residence, or they sell the home. Any remaining equity will belong to the borrower or to the estate. The debt incurred from the loan will never pass along to the estate of the heirs and no other assets will be affected by the loan.
This type of loan could be a tremendous benefit to you now and to your children and grandchildren.
If you have any other concerns or questions, contact me at 818-458-3329(cell). I am a certified Senior Real Estate Specialist.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment