Reverse Mortgage Loans from Delta Home Loans
About Face – How Reverse Mortgages Work
Reverse mortgages are probably best understood when compared side-by-side with a traditional home mortgage, otherwise known as a "forward" mortgage. The following table shows the differences between the two mortgages:
As you can see, both loans incur debt against your home and both affect equity, but they do so in very different ways. For a traditional home mortgage, you would be making monthly payments to a lender. With a reverse mortgage, they will make the payments to you. In essence, the two loans work the complete opposite of one another.
Which Reverse Mortgage is Right For You?
There are basically three different reverse mortgage plans being offered today: Uninsured, Lender-Insured and FHA-Insured:
Uninsured. This type of reverse mortgage differs dramatically from an FHA-Insured or Lender-Insured loan. With this plan, you will receive monthly loan advances for a fixed term only – the number of years you select when you first take out the loan. The second important difference to note with an uninsured loan is that it will be due on a specific date. This type of reverse mortgage is best suited for short-term, substantial cash needs.
Home Equity Conversion Mortgage. The most common type of reverse mortgage is the only program that is federally insured and backed by the U. S. Department of Housing and Urban Development (HUD).
|Lender-Insured. This type of reverse mortgage offers monthly loan advances with or without a line of credit, for as long as you live in your home. This type of plan typically offers larger loan amounts than an un-insured or FHA-Insured plan would. You may also be allowed to mortgage less than the full value of your home, thus preserving your equity for later use.|
Moving in Reverse
A reverse mortgage can help you gain financial independence and maintain an adequate standard of living. The money you receive is tax-free.
Here are some ways borrowers are utilizing their tax-free income:
- Traveling and taking vacations
- Obtaining in-home healthcare
- Paying for prescription medications
- Supplementing retirement
- Purchasing an annuity
- Paying for grandchildren's educational expenses