Lessons Learned from Years with Homes
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. 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.
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. If the borrower wishes to pay off the loan at any time, he or she still has the right to do so. The reverse mortgage is conveniently designed such that the loan balance cannot exceed the value of the home. The federal government of the united states guarantees the reverse mortgage and the borrower do not need to worry about problems in receiving the agreed monthly payments from the lender.
Unlike other financial products like the home equity loan or the mortgage refinance, the HECM or the reverse mortgage loan have simpler requirements to meet. 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. You might also be required to meet a counsellor who is HUD approved in order to ascertain whether the reverse mortgage is suitable for your needs. The counsellor will help you to understand deeper how the reverse mortgage works as well as helping you to explore other possible alternatives that could be available at your disposal.
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 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.