Reverse Mortgage Wisconsin

What can a senior do to avoid stock market dips or inflationary price increases? I am asked pretty regularly if I can provide help for a mother or father whose savings has taken a hit and the golden years are anything but that to them. There is a strategy that some seniors employ that can help deal with a challenge like this. It can free up discretionary income, eliminate a mortgage payment, and provide some liquidity so they don't have to use their retirement funds.

If you are a senior who wants to live in your own house, a Wisconsin reverse mortgage might be just the ticket relieve some of the financial burdens you are facing. A reverse mortgage can give seniors, age 62 and above, cash, a line of credit, or monthly income. In fact, it is possible you may qualify for all three and no monthly mortgage payment is needed. The money that is received is also tax free which increases your spend able income without the tax drawbacks. The loan is paid back when both of the borrowers permanently move out or pass away. It's a great way to get some financial security and maybe even live a little more!

Years ago reverse mortgages had some negative thoughts attached to it. However, the department of housing and urban development (HUD) has taken over with many rules and regulations to help stop any fraud. There is a very specific process every senior must go through including a third party counseling for seniors to make sure every senior understands the reverse mortgage process. If a senior does a Wisconsin reverse mortgage they can never lose their house or be kicked out. Another concern seniors may have are costs involved with the reverse mortgage. The fees can be higher due to the fact you may have FHA mortgage insurance premium required to do the loan. These costs are rolled into the loan and you won't have to spend any out of pocket money on these. To make the loan worthwhile you should expect to be in the house at least three years and preferably five.

There are many reasons clients take out a Wisconsin reverse mortgage. Some need to cover healthcare costs and some just want to use the money for day to day expenses because social security isn't enough. Others use it for sophisticated financial planning or estate purposes, like a life insurance policy or buying an income property. One could use it to travel the world and would like to spend their money they have earned rather than give it away. I have even had some seniors use the money to send grandchildren to private schools. The key is you can use the money for whatever purpose you decide, the ultimate in flexibility.

Reverse mortgages are a great option for some seniors but not necessarily the correct option for everyone. If you are interested in a Wisconsin reverse mortgage, it is imperative to find someone who knows the ins and outs of reverse mortgages. They can calculate how much money you might be able to receive and give you proper advice for your situation.

With the recent wave of Wisconsin Reverse Mortgages happening there is a lot of misinformation out there. I have heard of some really bad reasons not to take out a reverse mortgage and decided it was time to write about some of them. Please remember reverse mortgages aren't for everyone but make sure the reason you aren't investigating them is not on this list. If you haven't even looked at a Wisconsin reverse mortgage for any of these reasons please take another look, it might work for you.

1. When taking out a reverse mortgage I no longer own the house my bank does. This is untrue because you are kept on the title as owner of the property. As a matter of fact the bank can't foreclose on you like a forward mortgage. You live in the house as long as you can and will always own the property till you decide to sell. like a regular mortgage the bank will place a lien on the house to insure it get paid off but you maintain complete control of the house.

2. My children won't get anything when I pass. Your estate only owes as much a the mortgage balance is at the time of payoff. The payoff is however much you have spent plus interest. Any equity that is left over is passed on to your heirs. the bank does not get too keep any of this extra equity. As an easy example if you owe 25,000 on the reverse mortgage and the house os worth 125,000 and it was sold. You would get the extra 100,000 not the bank or anyone else. The lender would get paid there 25,000 they have given you.

3. I could get forced out of my home by my bank. FHA/HUD reverse mortgages specifically state that you can not be forced out of your home.

4. Social Security and Medicare will be affected by the money I receive from the reverse mortgage. This money is actually considered a loan and not income. For this reason a reverse mortgage does not lower Social Security or Medicare benefits like some want you to think.

5. I must have really good credit and income to qualify for a reverse mortgage. Actually it is a lot easier to qualify for a reverse mortgage than a forward mortgage that you have had in the past. Since there are no payments you don't need income to qualify. As for credit the only thing that is looked at is if you are currently going through a bankruptcy you may not qualify. If you have bad credit you will still qualify for a reverse mortgage.

6. My home must be free and clear with no mortgages to be able to get a reverse mortgage. No, you can have a mortgage and still qualify for a reverse mortgage. You will pay off the current mortgage with your new reverse mortgage and will be getting rid of the previous mortgage payment. You must have enough equity to pay the mortgage off completely and you will have to use some of your available cash to do so.

7. There are large out-of-pocket expenses which make it hard for seniors to get the loan. All of the costs, whether closing costs or interest, are financed. That means there are few out-of-pocket expenses at any point in the reverse mortgage.

8. Reverse mortgage interest rates are higher than a regular mortgage. This is just not the case. In most cases the reverse mortgage has a lower rate than the current conforming fixed rate. The HECM product's interest rate is set by the Federal government.

9. I might "outlive" the loan (don't we all wish for that?). FHA/HUD reverse mortgages are designed specifically so that you can't outlive the loan. When you get the reverse mortgage, the lender will charge you 2% to purchase mandatory FHA mortgage insurance. That insurance guarantees that even if you live to be 100, you can never owe more than the value of your home and you can never be forced to leave.

10. A reverse mortgage is like a home equity loan. First, home equity loans may have many requirements such as high income, low debt, and good credit that a reverse mortgage does not. Second, you can "outlive" a home equity loan and end up being foreclosed on by the bank. This can never happen with a reverse mortgage. Third, a reverse mortgage usually has significantly lower interest rates.

Those were ten of the biggest misconceptions out there about reverse mortgages. I am sure I missed some but the key is get with a good reverse mortgage expert and they will be able to answer your questions. There are many resources that will help educate, I suggest you do some reading!