January 2, 2020 2 min to read
Essentials facts about reverse mortgages
Category : Finance
If you are a senior citizen aged 62 and above, own a home and it is your primary residence, you can have access to a reverse mortgage loan.
This form of loan enables homeowners to borrow money based on the value of their homes. The impressive feature of this type of loan is that the borrower is not restricted to pay back the debt immediately.
Instead, the payment is deferred until they pass away or move to another home. In that case, the payment of the mortgage is taken from the sale of that home.
Please note that the government doesn’t provide these loans. The Federal Housing Authority (FHA) with the help of the Home Equity Conversion Mortgage (HECM) program does.
The FHA insures reverse mortgages to ensure lenders recover their entire investment. Thus, lenders never have to worry about incurring losses. This happens even when the home’s sale value is lower than the balance of the loan.
When used appropriately in a well-organized financial plan, a reverse mortgage can be a very helpful tool for seniors.
Therefore, this article is meant to help you learn the details concerning reverse mortgages and if this is what you need. The main goal here is to help you make informed decisions.
How a reverse mortgage works
A reverse mortgage loan is specially designed to assist senior citizens to become financially stable. In fact, it becomes super helpful to those with fixed income.
Among the things which determine the amount of money available to the borrower includes the value of the home, the amount the borrower still owes on the mortgage, other home loans and of course the age.
As mentioned above, you have to be aged 62 and above. A non-borrowing spouse under 62 years is also eligible. The home in question must be your primary residence.
In other words, you must live in that home for a period of at least 6 months and one day every year. Don’t assume you are disqualified because if you have bad credit.
Consult a qualified reverse mortgage broker and see if they can help you work something out. In most cases, past credit issues can be rectified.
The money you will be able to draw from the loan will depend on your age. The older you are the more you are eligible to get.
That is because the amount of money is calculated based on the age of the youngest spouse in that home or estate…
Continue reading the article and learn more about reverse mortgage on Daisy Linden’s blog.