With the prevalence of negative press about the so-called disadvantages of HUD reverse mortgages, as well as the news about senior homeowners being scammed by deceptive lenders, many homeowners may have been dissuaded from even researching this type of financing. But, most lenders are not trying to trick their customers. For situations in which a HUD reverse mortgage is the right fit for a homeowner, there are many great benefits offered by this type of financing. The FHA insures most of these loans and it is continually making improvements to the consumer safeguards associated with them.

Benefits of this Type of Financing

If a homeowner determines that this type of loan is the right type of financing for his or her needs, there are multiple benefits they can receive from the loan. The homeowner will not have to make monthly mortgage payments on the loan as long as he or she remains the owner of the home and meets the requirements of the loan. These requirements include staying current on homeowner’s insurance, property taxes, and home maintenance or repairs. Once the loan is due to be repaid, the FHA guarantees that the homeowner will never owe more than the value of his or her home as long as they met the aforementioned requirements.

If a homeowner has enough equity in his or her home, the equity can be turned into cash. There are different disbursement options to choose from, including a lump sum, a line of credit, monthly payments, or a customized combination plan. There are no regulations on how homeowners spend the cash they receive. Some homeowners use the cash for medical bills, repayment of other debt, or for personal expenses.

How to Qualify for this Loan

To be eligible for this loan, the borrower must be a homeowner and be at least 62 years old. The home being financed must be a residential property and be the homeowner’s primary residence. There are no income or credit score requirements for this loan, so it is easy to qualify compared with other home loans. All potential borrowers are required to participate in HUD reverse mortgage counseling so that they are informed about the requirements of the loan and are certain that that type of financing is the best option for them.

The Future of HUD Reverse Mortgages

In 2010, the FHA expects to insure about $30 billion in HUD reverse mortgages. Because of this, the current administration has requested a $250 million credit subsidy for the reverse mortgage program and an increase to the current mortgage insurance premium from 0.5% to 1.25%. They also want to reduce the principal loan limit for the loans. These changes could affect the cost of the loan, so now is a good time to look into this type of financing.

Current Rates Are Low

Right now is a great time to consider this type of financing while rates are low and before the required mortgage insurance premium increases. This type of financing allows a homeowner to live in his or her home without worrying about making monthly mortgage payments and, if there is sufficient equity, to receive additional funds.

The amount of money a homeowner can receive depends on his or her age, home value and current interest rates. This type of financing can be a great option for senior homeowners who need to finance their homes and still have accessible money each month. Homeowners who feel this is the right type of financing for them can contact a reputable source for more information.

Victoria Belle-Miller is the newest member of the Senior Reverse Mortgage writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the team and a valuable source of sound mortgage advice.