Finance

What is a reverse mortgage?

What is a reverse mortgage?

A reverse mortgage is a homeowner’s loan from the age of 62, which allows them to convert some of the equity of their homes into cash.

 The product is designed to help retirees with limited incomes use the accumulated assets in their homes to cover their monthly basic living expenses and pay for healthcare. However, there is no restriction on how reverse mortgage revenue can be used.

 The loan is referred to as a reverse mortgage because the lender does not make monthly payments to a lender, as with a traditional mortgage, but also payments to the borrower.

 The borrower does not have to repay the loan until the house is sold or otherwise vacated. As long as the borrower lives in the apartment, he does not have to make any monthly payments on the loan balance. The borrower must have the tax on the property tax, the homeowner’s insurance and the homeowners association (if applicable).

 After receiving a reverse mortgage, borrowers must continue to pay property taxes and insurance and maintain the home according to FHA guidelines.

 Normally, the loan does not become payable as long as you live in the home as your primary residence and continue to meet all loan obligations.

 Reverse mortgage loans are generally used for housing renovation, medical expenses, and daily living expenses. Homeowners who have an existing mortgage often use the reverse mortgage loan to repay their existing mortgage and avoid monthly mortgage payments.

 A reverse mortgage loan uses the equity of a home as collateral. The amount of money that the borrower can receive is determined by the age of the youngest borrower, interest rates and the lower value of the home, the selling price and the maximum credit limit. The funds available to you may be suspended for the first 12 months following the conclusion of the loan due to HECM requirements. In addition, you may need to provide additional funds from the loan proceeds to pay taxes and insurance.

 The loan usually does not have to be repaid 6 months after the last surviving homeowner has left or died. At this point, the estate usually sells the property to repay the remainder of the reverse mortgage, and the heirs receive the remaining equity. The estate is not personally liable for additional mortgage debt if the house sells less than the repayment amount of the reverse mortgage

Comment here