Reverse Mortgage: Details on
How It Works
the major requirements for getting a reverse mortgage is being at least sixty two years of age because these are
only for seniors above age 62. While they allow people a way to cash out some of their equity, they are not a
cash out mortgage refinance loan. If you have a reverse mortgage, you do not have to pay the loan back unless
you don’t meet all the terms of the loan. In order to get a reverse mortgage, there are some things you will
have to do to qualify.
The requirements for a
reverse mortgage are that you much be 62 or older, you have to own your home or be very close to doing so, you
have to plan to live in the home you are getting the mortgage for, and you have to get consumer information from
an approved source first. These types of mortgages are not the way to go for every senior out there, but if you
fit all the requirements and have talked to a lender and feel that it is the way to go, then go for
A reverse mortgage has that
name because instead of you making monthly payments to a financial institution for a home mortgage or mortgage
refinancing, the lender actually makes monthly payments to you! The payments can be made in different ways, such
as a lump sum, periodic advances, or monthly payments.
While the house is the
collateral for these payments, the borrower does not need to have an income in order to qualify for a reverse
mortgage. If you have a bad credit mortgage, rest assured that the new loan will not be one as well. When you
sell the house, it all gets paid off by the sale of the house. If the sale price is lower than the loan and
interest combined, it is still considered paid off. HUD would pay the difference to the financial institution,
as this would be considered a short sale. If you pass away during the term of the loan, your beneficiaries will
not be stuck paying the loan back because the bank will sell it and profit from that sale.
Once you understand
everything about a reverse mortgage, you will better be able to decide if this is the right thing to do. With
the way social security is diminishing, you might want to look into it as you approach retirement.