All You Need To Know About Reverse Mortgage And Its Requirements.
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.
The beneficiaries of the reverse mortgage still pay taxes and the property insurance as well as using the house as their main residence for the duration of the loan. As the loan balance grows over time each time the borrower receives the monthly payment, the home equity on the other hand declines.
Just Like all other loans, the reverse mortgage will also be eventually be repaid and is due at the death of the borrower or when he/she sells the property. 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 arranged such that the amount of money owed cannot be more than what the property is worth. The borrower does not need to worry about the lender failing to remit the payments because these loans are fully guaranteed by the federal government the United States.
The reverse mortgage loan or the HECM finds strength in their ability to keep their requirements simpler than the other financial products such as the home equity loan or the mortgage refinance. If you want to apply for the reverse mortgage, you should be 62 years or older,you should be the sole owner of your home as well as using it as the main residence,the home should be housing a single family of up to four members and the house should be in good condition before taking the loan. In a bid to determine whether the product is suitable for your needs, you might be required to meet with a HUD-approved counsellor. The counsellor will help you to understand deeper how the reverse mortgage works as well as helping you to explore other possible alternatives that could be available at your disposal.
Prospective borrowers also undergo financial assessment before they can qualify to ensure that the borrower is able and willing to pay for property taxes, basic home maintenance,home owner’s insurance and the Home Owner’s Association fees if and when they are 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 borrower can choose to receive the lump sum amount of the reverse mortgage,monthly payments for a specific number of months or a given amount monthly as long as he/she lives in the house or a combination of two or more payment plans depending on their financial needs.