Short Course on Homes – What You Need To Know
All You Need To Know About Reverse Mortgage And Its Requirements.
If you are 62 years or above and you have accumulated home equity and you are considering ways of supplementing your retirement income or pension, then you might want to consider reverse mortgage which is also termed as home equity mortgage (HECM) which is one of the important financial product in the United States. The home equity conversion mortgage comes with no mortgage payments on the monthly basis, unlike the other conventional mortgage arrangements.
For the duration of the loan, the borrower is required to still pay taxes and insurance on the house and they are expected to still continue living in the property. As the loan balance grows over time each time the borrower receives the monthly payment, the home equity on the other hand declines.
A reverse mortgage is a loan like any other and it is eventually settled at the demise of the borrower or sale of the property. If the borrower wishes to pay off the loan at any time, he or she still has the right to do so. The reverse mortgages are arranged such that the amount of money owed cannot be more than what the property is worth. 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 solely own the property and are currently residing in it, you have a single family of up to four members, you are 62 or older and the house is in good condition, then you are eligible to apply for the reverse mortgage. 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 intention of the counselling sessions is to make the borrower better informed about the reverse mortgage and to be able to see other alternatives that could be available to him/her.
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 value of the reverse mortgage depends on the age of the borrower, the property worth and the magnitude of the home equity one holds. The reverse mortgage can be paid to the borrower on monthly basis for a specific time or paid specified amount monthly for as long as the borrower lives or even a combination of more than one payment plan that suits the borrower’s needs.