What Is a Reverse Mortgage?

A reverse mortgage is a loan that enables older people to access the equity in their homes. The loan is tied to the equity in the home, and as such, it is subject to several conditions. For instance, you must be 62 or older to apply for a reverse mortgage. It's important to note that this type of loan requires you to spend the majority of your time in your home.

 

Applicants may qualify for the reverse mortgage if they have sufficient income and can maintain the monthly mortgage payments. The FHA has implemented new guidelines to prevent lenders from denying reverse mortgages to people who don't qualify. The new guidelines, which were implemented on March 2, 2015, stipulate that reverse mortgage applicants undergo a financial evaluation. This assessment is necessary to ensure that they can continue to maintain their property charges, even if they have no intention of repaying the loan.

 

The benefit of a reverse mortgage is that it is tax-free, and the payments are made to the homeowner instead of a lender. The interest will accrue and increase the balance of the loan. However, you'll have to remember that the balance will rise as long as you stay at the home. If you don't make any payments, you may lose your home to foreclosure.

 

Another advantage of a reverse mortgage is that it provides extra cash to help meet your needs during retirement. With an extra stream of cash, you can pay for medical expenses and other expenses during your retirement. Taking out a reverse mortgage is a big decision and it is important to learn as much as possible about it before making the decision.

 

While many reverse mortgage salespeople attempt to convince people to apply for one, you should take the time to compare all of the information and make an informed decision. You should avoid unscrupulous agents who will try to scare you into buying a product. Moreover, do not fall for false government claims that may not be true. Instead, find a reverse mortgage counselor who you can trust.

 

You can receive a reverse mortgage as a lump sum, monthly payments, or a line of credit. In some cases, the difference between the loan and the value of the home can be returned to the beneficiaries. However, if the value of the home rises, your heirs can pay off the balance and keep the property. Similarly, if the reverse mortgage exceeds the value of your home, you can sell it and get a full refund of the difference. When going for a second mortgage, see this page first.

 

While there are many types of reverse mortgages, most are Home Equity Conversion Mortgages, which are insured by the Federal Housing Administration (FHA). However, some restrictions apply. You must be at least 62 years of age to be eligible for a HECM loan.

Get more info on reverse mortgage at https://en.wikipedia.org/wiki/Reverse_mortgage now.