Reverse Mortgage Information
Featured Reverse Mortgage Article
Used to release home equity in the property as multiple payments or one lump sum, a reverse mortgage is a loan accessible to individuals 62-years-old and older in the United States. The obligation of the homeowner to repay the reverse mortgage loan is deferred until the homeowner becomes deceased, the house is sold or the owner goes into retirement aged-care.
While a typical mortgage for the homeowner consists of a monthly amortized payment to the financial lender, a reverse mortgage consists of no payments as all the interest is added to the property lien. With the normal mortgage, usually the mortgage is fully paid after 30 years and the property is released from the financial lender. Whereas with the reverse mortgage, the homeowner receives payments monthly, as the debt on the property increases on a monthly basis. If a property has a value increase subsequent to a reverse mortgage, it is likely to obtain a second or third reverse mortgage over the enhanced home equity.
The Basic Requirements for a Reverse Mortgage
The Basic Requirements Reverse Mortgage The first qualification for a reverse mortgage in America is the borrower has to be at least 62-years-old. Although there are absolutely no credit requirements or minimum income, there are certainly no other requirements and homeowners should ensure they qualify for the loan prior to investing time and money into the entire process. The funds can be used for any purpose for most reverse mortgages. However, the financial borrower must pay off any mortgage which exists with the reverse mortgage proceeds and personal additional funds if necessary. A pending bankruptcy normally slows the whole process.
Applicants must seek free financial counseling from an approved
source by HUD (Department of Housing and Urban Development). The financial
counseling actually provides a safeguard for the financial borrower and the
family. This assures the borrower comprehensively understands the purpose of
the reverse mortgage and how it’s obtained. The AARP (American Association
of Retired Persons) has proposed a complete plan—which must be approved
by the federal US government—for maintaining closing costs low for senior
citizens that qualify for reverse mortgages.
Acquiring the Mortgage Program
The homeowner completes a loan application and chooses a payment plan—whether lump sum payment or fixed monthly payments, line of credit or a combination. Once all pertinent data is received, the lender finalizes parameters of the loan with the homeowner, which can take 4-8 weeks to underwrite the loan package. If the loan package is fully approved, signing of the loan is scheduled.
The homeowner has three business days subsequent to the closing to cancel the loan. The reverse mortgage loan is repaid when the homeowner ceases to be occupant of the principal residence. Of course, the repayment obligation can’t be more than the sale’s price or value of the home.
You spent years paying for your house.
Now let it pay for you!
