{UAH} REVERSE MORTGAGE FOR FORUMISTS APPROACHING THEIR MID 60S

Friends,

I thought I could share this here as some of our people on this forum have been abroad for a long time, taken mortgages out, and plan to retire abroad.


So, what is a reverse mortgage?

A reverse mortgage is supposed to be a way for older people, who have houses they bought many years ago for a low price, but who wish to remain in their homes to get some money out of them.  The bank pays you a certain amount every month which is actually a loan backed by the value of your house.

1. The house does not have to be mortgage free; it just has to have a mortgage amounting to less than the amount the government guidelines will allow to be lent.  The amount the government guidelines allow to be lent is determined by the age of the owner and the appraised value of the property.Where there is an existing mortgage, it will be paid off out of the proceeds of the reverse mortgage and only the remainder will be available to the borrower.  So for example if the house is worth $500K, the remaining existing mortgage is $100K, and the amount allowed to be lent is $250K, the net amount available to the borrower will be $150K.


2.  The bank does not pay you a set amount every month unless you choose the annuity option.  You can also choose a line of credit type arrangement where you request amounts when and as desired, or a lump-sum payment.

3. The loan becomes due when the owner ceases to occupy the property. Obviously the owner ceases to occupy the property on death, but if the owner goes into permanent long-term care, the loan also becomes due.  So a person can't take out a reverse mortgage and then decide to move somewhere else and rent out the house, unless s/he can afford to pay back whatever the loan balance has increased to (because of the accumulated interest) by then.

For many people it seems to be a good way to get income at a time when they need it. I hope this explains it in general terms, which is the only way I understand it. 

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*Abbey Kibirige  Semuwemba*

Stalk my blog at: http://semuwemba.com/

"My journey is long and my preparation is so little, and weakness has gripped me and death is chasing me!"

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