Reverse mortgages designed to help “house rich, cash poor” seniors meet their day-to-day expenses have gained popularity. Equity is taken out of the home, so debt increases and equity diminishes over time, (unless the property value increases and offsets this use of equity).

Many lenders offer reverse mortgages, and most are set up so that there is no monthly payment as long as the owner or co-owner(s) reside in the home. There are no minimum income requirements, and most plans allow the owner to retain title to the property until they have lived in a different permanent residence for at least 12 full months, sell the property, die, or the end of the loan term is reached.

The Home Equity Conversion Mortgage (HECM) is the only type of reverse mortgage insured by the Federal Housing Administration (FHA). Even if the original loan on the home was not an FHA loan, the reverse mortgage can be.

Seniors should first consider all their options and take a realistic look at monthly expenses. The AARP warns not to take too big of a chunk out of home equity, as this may affect the ability to collect Social Security Income (SSI). As an alternative, the retired home owner can consider downsizing to a smaller dwelling, or relocating to a less expensive neighborhood. Visit http://www.aarp.org for more information.
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The Information in this Post is Provided by:
Integra Lending Group, LLC
Phone: 985 206 0960
Fax: 985 206 0965
Email: ls@integralg.com
For a Free Pre-Approval, Visit: Integra Lending Group
Proudly Serving St Tammany Parish Louisiana

A prepayment penalty is a fee charged to borrowers that make full payment on their mortgage, or pay off a substantial portion (generally anything exceeding 20% of the total loan amount), ahead of schedule. This is a clause written into some contracts to protect the lender’s book of business in exchange for providing a lower interest rate, or for providing financing to a high-risk borrower.

Prepayment penalties vary with different lenders, but generally apply to a one-, two-, three-, or five-year period of time. This fee can be expressed as either a specific number of months’ interest or a percentage of the outstanding balance. A ‘hard’ prepayment penalty applies to either the refinance or the sale of a property. A contract written with a ‘soft’ prepayment penalty permits the borrower to sell their property without incurring a penalty, but does restrict refinancing for a set period of time. It is important for the consumer to know that a prepayment penalty is the borrower’s choice and should never be considered a requirement!

Make sure you are working with a reputable loan professional who is aware of your long-term plans before consenting to sign off on an agreement that includes a prepayment penalty! Always ask for a written evaluation of your loan options.
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The Information in this Post is Provided by:
Integra Lending Group, LLC
Phone: 985 206 0960
Fax: 985 206 0965
Email: ls@integralg.com
For a Free Pre-Approval, Visit: Integra Lending Group
Proudly Serving St Tammany Parish Louisiana