Living peacefully in our own sweet house is the keen desire of all human beings. All of us wish to stay comfortably without the need of changing our dwellings every now and then as in the case of the guys that live on rent. But all of us are not so fortunate to spare extra dollars for purchasing or erecting costlier premises. That’s where banking institutions or other lenders come to the help of the needy persons. All must know what is a reverse mortgage, its eligibility conditions and the unique benefits.
Those needing loans in terms of mortgages must know these facts –
- A reverse mortgage is a type of loan that is meant for the senior citizens that reach the age of sixty two years or more than that. The homeowners are allowed to convert their home equity into cash without the burden of monthly mortgage payments.
- The borrowers need to continue paying the taxes and insurance and also maintain the home in perfect manners. The borrower has to meet all the obligations associated with it. He or she does not have to repay the loan as long as the loan is occupied by him for residence. The purpose of such loans is for making payments for home renovations, daily living expenses or the ones related to medication or hospitalization. This type of loan is often availed by the guys for paying off their present mortgage and be saved from the relevant monthly mortgage payments.
- Home’s equity is somewhere used as collateral. The amount of such loan depends upon the borrower’s age. Additional funds may be set aside from the loan proceeds for paying taxes and insurance etc.
- The reverse mortgage product is usually meant for helping the retirees that have limited sources of income. No problem as regards use of the loan amount.
- The biggest advantage of reverse mortgage is that you don’t have to return the loan by the time home is sold or else vacated. No monthly payments are needed till the borrower lives in the home. But he or she has to clear the homeowners insurance, property taxes or the dues of the homeowners.
- Reverse mortgage loans can be allowed against the single-family homes, townhouses, two-to-four unit owner-occupied residences, approved condominiums or the manufactured homes.
- The borrower’s heirs or the estate can repay such loans, keep the home or sell it off for repaying the loan. They can acquire the remaining amount after selling the house if its sale proceeds exceed the amount of the reverse mortgage loan. But no amount has to be paid by the estate if the sale value of the mortgaged house falls below the owed balance.
Known as HECM that is “home equity conversion mortgage” reverse mortgage is best option for the senior citizens that intend to supplement their retirement income. What is a reverse mortgage must be known as it does not involve any monthly payments as in the case of conventional forward mortgage.