Useful Facts About Reverse Mortgage And Its Eligibility.
A reverse mortgage which is also referred to as HECM(Home equity conversion mortgage) is a financial service in the United States which allows homeowners 62 years or older to use their accumulated home equity to supplement their pension or retirement income. 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. Of importance to note is the fact that the borrower can also choose to pay off the loan at any time. The reverse mortgage is conveniently designed such that the loan balance cannot exceed the value of the home. 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.
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 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. 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 counselling sessions are expected to help you understand better how the reverse mortgage works and the other various financial options available for you.
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 amount one can borrow is a factor of their age, the value of the house and the amount of the home equity. 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.