Useful Facts About Reverse Mortgage And Its Eligibility.
If you are 62 years or above and you have accumulated home equity and you are considering ways of supplementing your retirement income or pension, then you might want to consider reverse mortgage which is also termed as home equity mortgage (HECM) which is one of the important financial product in the United States. As compared to the traditional forward mortgages,reverse mortgage does not have monthly mortgage payments to be made.
For the duration of the loan, the borrower is required to still pay taxes and insurance on the house and they are expected to still continue living in the property. As the loan balance grows over time each time the borrower receives the monthly payment, the home equity on the other hand declines.
The reverse mortgage is a loan by all definitions and will also be repaid in full when the borrower sells the property or when he/she passes on. If the borrower wishes to pay off the loan at any time, he or she still has the right to do so. The reverse mortgages are designed such that the loan balance at any time is not more than the value of the property. The reverse mortgages are guaranteed the federal government and therefore you will not have to worry about the possibility of failure by the lender to make the agreed amounts to you.
One of the attractive features of the reverse mortgage loan or the HECM program is their simple and easy to meet requirements as compared to the other financial products like the mortgage refinance or the home equity loan. If you solely own the property and are currently residing in it, you have a single family of up to four members, you are 62 or older and the house is in good condition, then you are eligible to apply for the reverse mortgage. The borrower is also required to set up a meeting with a counsellor that is approved by the HUD to determine if the reverse mortgage is the best option as at the time. The intention of the counselling sessions is to make the borrower better informed about the reverse mortgage and to be able to see other alternatives that could be available to him/her.
Before you can be granted the reverse mortgage, you will also undergo financial assessment aimed at ascertaining that you can pay for the property taxes, the homeowner’s insurance, home maintenance and Home Owner’s Association if and when applicable.
The value of the reverse mortgage depends on the age of the borrower, the property worth and the magnitude of the home equity one holds. The reverse mortgage can be paid to the borrower on monthly basis for a specific time or paid specified amount monthly for as long as the borrower lives or even a combination of more than one payment plan that suits the borrower’s needs.