Get The Facts Before You Commit To A Reverse Mortgage
Reverse Mortgage – Things You Must Know
The senior residents of various states of America have welcomed the trend of reverse mortgage with open arms. It is the financial tool that helps the people above 62 years to transform their home equity into moment cash. This money generated by adopting a reverse mortgage is of great help for these people, who without other supplies of income. These mortgages have been devised to let the senior citizens of the country to proudly owe their house till their death and build up money using this means. It is necessary to understand the various aspects of reverse mortgage to understand it better and extract the benefits offered by it.
How Reverse Mortgage Works
Unlike other forms of mortgages, allows the borrower to build up money from the lender. In other words, the borrower doesn’t have to repay any monthly payments and the lender pays him or her during the term of the mortgage. The lender may pay this loan amount in any of the following ways:
· A single amount
· A monthly installment
· Also, it may be deposited in the account of the borrower
The meaningful characterize is that it allows the borrower to repay the whole loan amount and the associated interest amount at the expiration of loan term. consequently, it has become the most famous facility amongst senior citizens.
A reverse mortgage is indeed the most popular form of mortgage in United States. However, you must be an informed customer of this kind of mortgage before truly buying it. Here are some of the most meaningful aspects:
· Before you opt for a reverse loan on your house, it is advisable to clear all types of pending debts on your home.
· The borrower is provided with the time period of three days to estimate his or her decision of taking a reverse mortgage.
· It is based on the scenario in which, home equity decreases and debt increases.
· You must be clear of the fact that you have to repay a huge amount at the end of the term.
You must meet the following eligibility conditions in order to avail a reverse loan for yourself:
· First of all, you must be above the age of 62 years.
· Secondly, you must possess a home under your own ownership.
· The home possessed by you must be your dominant residence.
· HUD must authorize your eligibility for reverse mortgage.
· You must be a resident of the home during mortgage term.
· You must have paid all other debts on your house or must be planning to repay them with the proceeds.
The home equity is calculated on the basis of factors like the age of borrower, the maximum limit of loan approved by FHA, the value of the house. There are various fees associated with such a mortgage including origination fee, title fee, escrow fee, appraisal fee amongst others.
consequently, it is always advisable to be an informed customer of a reverse mortgage to avoid any kind of setback in the future.