Is A Reverse Mortgage Right For Me

Reverse mortgage are loans to elderly homeowners that need not be repaid until they die, sell their home, or move out permanently. The amount of money available to the senior with a reverse mortgage depends mainly on their age. Other deciding factors are the interest rate that the reverse mortgage will charge, and the value of the home. The reverse mortgage is subject to the maximum value a senior is allowed to draw is set by the lender. The senior is able to draw only to that set amount with the reverse mortgage and cannot go over the maximum value set. The amount of money available for the senior to draw is larger the older they are, the interest rate is lower and the higher the value or the value limit.

FHA’s Home Equity Conversion Mortgage, Fannie Mae’s Home Keeper program are the two most common reverse mortgage programs available to seniors. They each differ in that FHA’s Home Equity Conversion Mortgage has a lower interest rate, but Fannie Mae’s Home Keeper program set the maximum value higher, so the senior has a larger dollar amount that is available to them. FHA’s Home Equity Conversion Mortgage sets the maximum value based on the home in the mid-range of your residing county. Where as Fannie Mae’s Home Keeper program sets the maximum based solely on the value of your home which is the reason a senior has a larger maximum value available to them.

If you want the largest possible monthly payment starting immediately, Fannie Mae’s Home Keeper would be the right choice. This is of course you are not planning on leaving the house to an heir. Under Fannie Mae’s Home Keeper program you could receive $1162.00 per month for as long as you reside in your home. The $1162.00 per month is based on a home valued at $300,000. The payments stop if you sell the house, or have to be placed in a nursing home for 12 consecutive months. The alternative would be to draw the maximum amount of $132,000 which is based on the same $300,000 valued home.

If your immediate need for cash is small but you expect that it will increase over time then FHA” Home Equity Conversion Mortgage may be a better choice whether or not you intend on preserving equity. The credit line with Home Equity Conversion Mortgage increases in dollar with time, but Fannie Mae’s Home Keeper is does not.

If you wish to preserve as much equity in your home as possible on the chance you want to leave it with an heir, FHA’s Home Equity Conversion Mortgage is the better choice because of the smaller buildup of debt. You need to consider the same alternative when withdrawing a lump sum.

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