Useful Facts About Reverse Mortgage And Its Eligibility.
Reverse mortgage whose other name is the HECM(home equity conversion mortgage)is a financial provision in the United States that offers senior citizens who have attained the age of 62 and above an opportunity to have their accumulated home equity used to add to their pension or retirement benefits. As compared to the traditional forward mortgages,reverse mortgage does not have monthly mortgage payments to be made.
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 you receive the monthly payments, the loan balance keep rising while on the other hand the home equity keep declining.
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. At any time at the course of his/her life, the borrower can choose to pay off the loan. The reverse mortgages are arranged such that the amount of money owed cannot be more than what the property is worth. 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.
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. For a borrower to be eligible to the reverse mortgage, he or she should be:62 years or older,should solely own the home and using it as the main residence,should be accommodating a family of up to four members and the property should be in good housing condition prior to the application for the mortgage. In a bid to determine whether the product is suitable for your needs, you might be required to meet with a HUD-approved counsellor. The counselling sessions are expected to help you understand better how the reverse mortgage works and the other various financial options available for you.
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.