Personal Finance 1st Edition by Jack R. Kapoor

Exercise 13

Using the Internet to Obtain Reverse Mortgage Information.

a. Visit the Web site of the American Association of Retired Persons (AARP) at www.aarp.org. Locate the AARP Home Equity Information Center, which presents basic facts about reverse mortgages. Then prepare a report on how reverse mortgages work, who is eligible, what you get, what you pay, and what other choices are available to borrowers.

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b. Visit Fannie Mae’s Web site at www.fanniemae.com/Homebuyer to find out about its reverse mortgage program.

Step 1 of 2

a) To be eligible for a HECM loan:

An individual, and any other owners of individual’s home, should be aged 62 or over, stay in that home like a principal residence, and not be delinquent on any federal debt.

His/her home should be a residence that is considered as in a 1-to 4-unit dwelling, or part of a planned unit development (PUD) or a HUD-approved condominium. Some homes which are manufactured are eligible, but many of the mobile homes are not.

His/her home should meet minimum property standards of HUD, but he/she can use the

HECM to pay the repairs only which may be necessary for home.

The HECM program offers the broadest selection of cash advance choices. He/she can take his/her entire loan:

• As a only one lump sum of cash; or

• “Credit line” account of a particular dollar sum which he/she control, that is, he/she decides at what time to make a cash withdrawal from that account, and how much cash to withdraw; or

• As a monthly cash advance in a particular period of time, or for as long as he/she live in that home.

In addition to above benefits, he/she can select one combination from options, and change his/her cash advance selections at any future time.

As with most opposite mortgages, the individual should repay the HECM loan in full at what time the last living borrower dies or sells the home. It also will become due and payable if:

• He/she permit the property to deteriorate, excluding for reasonable wear and tear, and he/she fail to right the problem;

• All borrowers everlastingly change to a fresh principal residence;

• Because of physical or mental illness, the last living mortgagor fails to living in the home for 12 months in a row;

• He/she fail to pay taxes related to property or insurance related hazard, or violate any other borrower obligation.