The first thing I want you to think about is what is equity anyway? Very simply it is the market value of your home minus any debt or mortgage you owe on the home. This equity is created in two ways: first because you have been paying down your mortgage or you paid it off. Second is from appreciation in your home’s value, this portion is like monopoly money, it is not worth anything unless you sell your home.
So now let’s talk about mortgages, a traditional mortgage is used to leverage your money. You may have $20,000 and you borrow $80,000 to buy a $100,000 home, as you make payments of interest and principal you build more equity in your home.
A reverse mortgage is where you have a $100,000 home, and for our example let’s say it is paid for, so you have $100,000 of equity. You use the reverse mortgage to access the equity you have built up over the years, the reverse mortgage makes payments to you each month reducing your equity a little bit each month.
So you spent years building up the equity in your home and a reverse mortgage lets you receive equity from your home for the years you have left. You can use this money for anything you want, it is totally up to you.
The Complete Guide to Reverse Mortgages: Turn Your Home Equity into Instant Income!
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( 3 / 257 )What would be required to do a reverse mortgage, if there is a revocable trust, the borrower is declared incompetent, the trustee is a third party, and an attorney is involved?
The title company would need to review the trust, any amendments, and restatements of the trust. Since the borrower is incompetent, the title company and lender may require 1-2 Doctors letters stating that the senior can no longer handle their financial affairs. It is required on the loan documents that the borrower sign as an individual therefore, a Power of Attorney or Conservatorship must be in place in order to move forward with the reverse mortgage.[ add comment ] ( 2 views ) | permalink |
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