Reverse Mortgage Could Help You Avoid Delinquency and Foreclosure

Mortgage delinquencies reached a new record high during the second quarter, according to a survey by the Mortgage Bankers Association (MBA). The delinquency rate for one- to four-family homes rose to a seasonally adjusted rate of 9.24% for all outstanding loans, compared with a year earlier. Mortgage loans that were delinquent or foreclosed totaled 13.16 %, also a record high.

It doesn’t take much to send a homeowner into delinquency. A job loss, illness, or other unexpected event can send you over the edge financially. “As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts. A year ago they accounted for one in five,” said Jay Brinkmann, MBA’s Chief Economist.

If you’re over 62 and worry that you may become another foreclosure statistic, it may be worth it to see if you qualify for a reverse mortgage loan. You can compare reverse mortgage lenders here.

A reverse mortgage allows you to cash out some of your home equity without having to make monthly mortgage payments. You can use the money for any purpose, including catching up on property tax payments, purchasing insurance, or paying down debt. You can even use a reverse mortgage to downsize to a less expensive home.

Generally, the best candidates for a reverse mortgage loan own their home free and clear or don’t have too large of a mortgage. Also, the older you are and the higher your home’s appraisal, the more money you qualify to receive with a reverse loan.

You may not want to get a reverse loan if you plan to move out of your home within a few years. Also, a reverse mortgage cuts into the amount of inheritance you can to leave to your children. A reverse mortgage counselor can help determine whether you can receive enough money from a loan to really help your finances.

This entry was posted on Friday, August 21st, 2009 at 12:10 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.