Resource: Reverse Mortgage Resources

Reverse mortgages are fairly complex and confusing beasts and tend not to be understood very well. So with a little digging I was able to find two great resources that will help you research and evaluate whether a reverse mortgage is right for your situation.

First off, wouldn't it be great to know approximately how much you can expect to get from borrowing a reverse mortgage. Wouldn't it also be great if you could get the value for three different options: lump sum payout, line of credit, or estimated monthly payments. Well I found a simple reverse mortgage calculator that will do all of this.

• AARP Reverse Mortgage Calculator

Another thing that you can do with this calculator is to figure up what the amount would be if you were to wait say 5 years to get your reverse mortgage. This will give you a quick comparison to decide if you should maybe wait before borrowing a reverse mortgage. Of course, this won't be completely accurate as the interest rate will fluctuate in the next 5 years.

Another good resource will provide you with a reverse mortgage counselor in your area.

• HUD Approved Reverse Mortgage Counselors

As stated in my previous posts, I highly recommend you talk with a mortgage counselor before you commit to a reverse mortgage program.

Shanghai to Promote Reverse Mortgage for Seniors

China is now starting to jump on the reverse mortgage bandwagon. The shanghai government is now going to actually promote reverse mortgages.

The Shanghai municipal government has just announced that it will promote reverse mortgages this year, after years of controversy on the topic.

Du Peng, deputy director of the Population and Development Studies with Beijing's Renmin University of China, welcomes the move. But he says the wide promotion will take time and considerable effort.

The population of china is aging as in other parts of the world and they are looking for ways to support this aging population. In Shanghai for instance, 20% of the population is over the age of 60 years old. Even with promotion, it will take 10 years for it to become widely accepted.

"It provides another choice for seniors to support themselves. But it will take over ten years for it to become popular, because the oldest groups of people who now own apartments are mostly the middle aged. Reverse mortgage will only be more applicable when these people retire."

Reverse Mortgages Need Closer Look

This article from 'The AGE' in australia discusses the need to be cautious when borrowing a reverse mortgage. One problem is that people don't actually read the full mortgage contracts.

LET'S be honest. Most people, when borrowing money to buy their home, don't bother to read the full mortgage contract. They check the essential terms like the amount being borrowed and the interest rate and sign on the dotted line.

One of the things that the Australian Consumers Association is concerned about the traps that are hidden in reverse mortgage documentation.

But the Australian Consumers Association is concerned that the same may not be true for the fast-growing number of reverse mortgages. The ACA recently reviewed 19 reverse mortgages and found a number of traps in the documents. It found many contracts were confusing and hard to interpret and contained wide-ranging default clauses that could result in higher interest rates being charged, a borrower's rights under the contract being limited, or even the enforced sale of the house.

They stress the need to take a close look at any documentation before signing for a reverse mortgage.

Reverse Mortgage for Home Purchase

Most people assume that a reverse mortgage can only be used for getting money out of a home they already own. But a specialized Reverse Mortgage from Fannie Mae allows seniors to purchase a new home. This is great for seniors looking to sell their current large home and move into a smaller home with no monthly mortgage payments.

The Fannie Mae reverse mortgage home purchase program does require the purchaser to put pay a small downpayment and then the proceeds from the reverse mortgage covers the remainder of the purchase price. Here are some of the benefits to using a reverse mortgage to purchase a new home:

1. No borrower income limits and no credit requirements. The loan is based on your age and the value of the home being purchased.


2. You can lower your down payment and keep more of your cash by choosing to use all or part of the loan proceeds toward your home purchase.


3. No monthly payments for as long as your life in the new home.


4. Loan proceeds do not affect Social Security or Medicare benefits. (If you receive Supplemental Security Income or Medicaid, these benefits may be affected.)


5. You do not pay back the loan until you sell your home, no longer use it for your primary residence, or pass away.


6. You will never owe more than the value of the home at the time of repayment, even if the loan balance exceeds the value of your property. This means no debt will ever be passed along to your estate or your heirs.

Source: www.fanniemae.com

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