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- Do You Need A Reverse Mortgage Lender?
Do You Need A Reverse Mortgage Lender?
- By Budgeting Help
- Published 12/13/2006
- Homeownership
- Unrated
Do You Need a Reverse Mortgage Lender
Reverse mortgages are becoming popular in America. Reverse mortgages are a special type of home loan that lets a homeowner convert the equity in his/her home into cash. They can give older Americans greater financial security to supplement social security, meet unexpected medical expenses, make home improvements, and more. Unlike ordinary home equity loans, a reverse mortgage does not require repayment as long as the borrower lives in the home. Lenders recover their principal, plus interest, when the home is sold.
The remaining value of the home goes to the homeowner or to his or her survivors. If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. The size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value. The older a borrower, the larger the percentage of the home's value that can be borrowed.
For example, based on a loan at today's interest rates of approximately 9 percent, a 65-year-old could borrow up to 26 percent of the home's value, a 75-year-old could borrow up to 39 percent of the home's value, and an 85-year-old could borrow up to 56 percent of the home's values. So, What are the Most Common Features of a Reverse Mortgage?
1. When the loan is over, the homeowner(s) or their heirs must pay back the loan amount plus interest. The homeowner must still pay the property taxes, insurance, and make repairs.
2. The money obtained can be used to pay the various financing fees on the same loan. The amount may depend on the age of the homeowner, the home's value or the interest rate and closing costs.
3. Before you apply for this mortgage, you must pay off any old debt on the property or use the money got from the mortgage to pay off the debt.
4. The debt owed includes the loan advances and interest on the loan. Also, the homeowner cannot owe more than what the home is worth at the time the reverse mortgage loan is repaid.
5. The mortgage is due and payable when the last surviving borrower sells or permanently moves out of the home or dies. If the homeowner does not pay the property taxes or fails to maintain and repair the home or does not keep the home insured, the lender would require a repayment of the mortgage loan.
6. A homeowner has three days to reconsider his decision of taking out the mortgage loan after the closing. If the homeowner decides he does not want the loan, he can cancel it.
If you’re interested in a reverse mortgage loan, you’ll need to take special care and beware that there are scam artists lenders out there—waiting to take advantage of unwary seniors. It can be easier than you’d think to fall into a trap.
Fortunately, you can find help searching for the best reverse mortgage lender for your needs.
The remaining value of the home goes to the homeowner or to his or her survivors. If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. The size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value. The older a borrower, the larger the percentage of the home's value that can be borrowed.
For example, based on a loan at today's interest rates of approximately 9 percent, a 65-year-old could borrow up to 26 percent of the home's value, a 75-year-old could borrow up to 39 percent of the home's value, and an 85-year-old could borrow up to 56 percent of the home's values. So, What are the Most Common Features of a Reverse Mortgage?
1. When the loan is over, the homeowner(s) or their heirs must pay back the loan amount plus interest. The homeowner must still pay the property taxes, insurance, and make repairs.
2. The money obtained can be used to pay the various financing fees on the same loan. The amount may depend on the age of the homeowner, the home's value or the interest rate and closing costs.
3. Before you apply for this mortgage, you must pay off any old debt on the property or use the money got from the mortgage to pay off the debt.
4. The debt owed includes the loan advances and interest on the loan. Also, the homeowner cannot owe more than what the home is worth at the time the reverse mortgage loan is repaid.
5. The mortgage is due and payable when the last surviving borrower sells or permanently moves out of the home or dies. If the homeowner does not pay the property taxes or fails to maintain and repair the home or does not keep the home insured, the lender would require a repayment of the mortgage loan.
6. A homeowner has three days to reconsider his decision of taking out the mortgage loan after the closing. If the homeowner decides he does not want the loan, he can cancel it.
If you’re interested in a reverse mortgage loan, you’ll need to take special care and beware that there are scam artists lenders out there—waiting to take advantage of unwary seniors. It can be easier than you’d think to fall into a trap.
Fortunately, you can find help searching for the best reverse mortgage lender for your needs.