Reverse Mortgage Explained

 

Reverse Mortgages are fast becoming all the rage here in the USA. As
with everything else to do with your financial security, you should
always exercise caution and seek as much information as you can from
multiple sources.If a Reverse Mortgage appeals to you then you may find
the following questions and answers useful.

What exactly is a reverse mortgage?

A reverse mortgage is specialized home loan that allows the home
owner to exchange a bit of the equity in their house into hard cash.
However unlike a conventional home equity loan or even a second
mortgage for that matter, there are no repayments to make until the
borrower stops using the home as their primary place of residence.

 Do you qualify for a Reverse Mortgage?

In order to qualify for a reverse mortgage you must be at least 62
years old, living in the a home that you own, with no outstanding
mortgage, or in some cases with a small amount of mortgage remaining
that can be settled with the monies received from the reverse loan.

What type of properties are considered eligible?

Most types of property are eligible including. Units, detached houses, Town houses and various manufactured houses.

How does a reverse mortgage differ from second mortgages?

With conventional second mortgages, you must make monthly repayments
and therefore you will be expected to have adequate income to meet such
terms. However a reverse mortgage differs in so much as it pays you the
money and does not require you to have any income.

Will the lender repossess my house if I live longer than the loan?

Absolutely not, you will not be required to repay any of the loan
providing you continue to live in the home and that you continue to
keep any current insurance and taxes on the home up to date.

What about my estate, will I have any to leave to my family?

Should you sell your house or if you no longer continue to use it
for your main residence, then your estate will pay back to your lender
the money you acquired from the reverse mortgage, in addition to any
other fees and interest. All of the remaining equity in your house,
will become the property of your inheritors.

How much can I expect to have from my house?

This will depend upon your age, current interest rates, and an
appraised assessment of your property or the F.H.A. mortgage limits for
your region, whichever is the smaller amount. by and large, the more
expensive your house and the elder you are, the more you can lend.

What are methods of payment?

You have a choice of options on how you would like to receive your
money from a reverse mortgage, you might want to have it as a line of
credit, or from one of the following options;

1 All at once in a lump sum,

2 Fixed monthly payments for a set period or for the duration of you stay in the house.

Usually the most popular option chosen by more than 55 per cent of
borrowers is to take the line of credit, which will allow you to
withdraw money on the loan proceeds at any given time.

Source:

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