National Better Hearing Month on May, 2018: Turning 62 and just heard a little about reverse mortgage.?
May, 2018 is National Better Hearing Month 2018. Best Hearing Aids - Hearing Pro in Ballwin The Hearing Aid Professionals!
Any loan is a big commitment and you need to do a lot more research than Yahoo Answers. Please check either HUD or NRMLA (national organization) for more detailed information. Consult with 2 or 3 reverse mortgage specialists in your area to hear the pros and cons.
The reverse mortgage program is an excellent and solid program. It is highly regulated by FHA and FHA insured. But is it good for you? And is it good for you now? Only you can answer.
It is a loan like any other loan: there are closing costs and conditions; a lien is placed on your home; bank advances you money based on the equity in your home; it must be paid back eventually. That's it.
What makes it different from your typical forward mortgages are:
1) only a senior (62 and up) is eligible
2) you do not have to qualify based on income or credit score, just age
3) you do not have to make monthly mortgage payments
4) there is no end date - loan continues for as long as you live in the house
5) there is no prepayment penalty
6) it is a non recourse loan - so only the house stands for the loan and the heirs are not personally liable
7) when the senior leaves the home permanently, they (either the senior or the heirs) have at least 6 months to either sell or refinance in order to pay back the loan.
Like any other loan it has it's specific requirements:
1) it must be your primary residence
2) you must continue to pay your property taxes, homeowners insurance and maintain the property
3) the loan only becomes due once you move, sell, or die
4) it is not assumable
One main concept that confuses people is that it is a negative amortization loan. A loan means that the bank lent you money in advance (instead of selling the house) in exchange for earning interest on what you borrowed. Although a reverse mortgage does not require you to make monthly mortgage payments, it is not free money. Every month that you do not make a monthly mortgage payment, the accrued interest is added to your loan balance. So it is a loan of "rising debt, decreasing equity." Unlike a forward mortgage that you MUST make monthly payments (or they foreclose on you) and every month that you make that payment, the loan balance goes down and your equity in the home increases.
Who should NOT do a reverse mortgage?
1) Any one who absolutely insists that the home must be left to the heirs, even at the expense of their quality of life.
2) Any one who does not need money to improve their lives.
3) Any one who plans to sell the home regardless within the next 3 years or so.
4) Any one who qualifies for a forward loan and has no problem making the monthly payments
The main concern for most financial advisers / counselors is that for many folks, the home is the last main asset they have. If someone does a RM at age 62, with perhaps another 30 years ahead of them, they may run out of equity. If someone does not have sufficient income to live on a monthly basis, it is very possible they will run out of money eventually. It is like living on a credit card and they've maxed out. A Realtor would prefer you sell now, and then just rent somewhere or move in with a child so that you have cash in hand. Unfortunately, that cash eventually also runs out and then you have no house and no cash. However, many of these same seniors will say that they prefer to remain independent and are glad that at least they were able to stay in their own home for as long as they could. Then there are those that are fine on a monthly basis if they can only get rid of that monthly mortgage payment, then there isn't a problem and they can live within their means. Then there are those that are financially solvent, and just want to do the things they postponed for so long while they were raising kids. What is your reason for thinking about it?
National Guard or the army reserves?
The National Guard will give better college benefits and will allow you to do combat arms jobs. The Reserves will only pay $4500/year for tuition while the National Guard in many states pays 100%. The reserves will allow you to do other schools more easily (nothing cool) since they have the federal training money while the National Guard is very careful with spending money. I agree with the other response of joining ROTC if you would like to go active duty. You can do ROTC and the National Guard and have your tuition paid for as well as having money for rent and food. ~1300/month after tuition is paid. Don't become an officer for the money, go to basic and think about if it is what you really want to do, don't rush into it.
National guard vs. active duty?
National guard is federal and state and reserve is just federal. I.E. Guard can be called in by governor of state. They are both part time meaning one weekend a month and two weeks a year. I was in the guard for almost 2 years before I went active duty. Honestly, it sucked. Standards are lower, training isn't nearly as good, guys aren't as familiar with everything because they hardly train, and it was a big hassle for me having to deal with civilian life and then military one weekend a month. Benefits are much lower and don't plan on getting any high speed missions in a guard unit. Oh, and reserve doesn't have 11B but guard does. My advice, go active for 3-4 years and get it over with. You experience in the military will be much more fulfilling rather then being a weekend warrior.