How does the Reverse Mortgage process work?Reverse Mortgages like any other mortgage is usually a loan that has been offered by a lender to a borrower with the borrower’s home acting as security. Traditional mortgages required that the homeowner uses their income in several monthly installments to pay off the loan. However, with the reverse mortgage, your loan balance will grow over time because the borrower isn’t making any monthly mortgage installments. Therefore, when you take up a reverse mortgage, you will not be required to pay off the loan unless you sell your home, move out, or pass away. This means that life expectancy plays a major role in the calculation, and eventually how much the borrower will get. This means the older you are, the more equity you have in your home and the lower the mortgage loan balance you will expect to receive.
How Reverse Mortgages WorkMost people in the Unites States are known to purchase their homes through mortgages. This usually means that the borrower went out and looked for a leader, made several monthly instalments reduce the balance owed to build steadily the equity in the homes they now own. Over time, the debt that you owed the lender decreased while your home equity increased, and you owned your home outright when your mortgage was paid up in full. However, the reverse mortgage doesn’t work the same way as a normal home mortgage, as the name suggests, it’s the opposite of the normal mortgage you took to own your home. In this particular case, you will not be making any monthly payments to your lender as you might expect. There is a twist, now, your lender will be making payments to you instead, but based on a certain percentage of the value of the home that you own. You will have the choice of getting cash in a lump sum or get your money in the line of credit, a regular cash advance, or a mix of these options. You will need to understand that as the loan you borrowed progress, the equity of your home equity decreases. In case you move out of the house, or fall ill and pass away, your lender will be entitled to recover the money that you owe them, which means they get to sell your home.
Getting a Reverse MortgageThere are several different types of reverse mortgages available to US citizens. However, the HECM or Home Equity Conversion Mortgages is the most commonly preferred choice to most seniors. These particular reverse mortgages are usually issued out by private banks and will be insured by the FHA or Federal Housing Administration. They are also guaranteed by the US Federal government. They have no particular income limitations or medical requirements, and there are no limitations whatsoever on how they can be spent by the borrower. The only drawback to this reverse mortgage is that there is a maximum loan amount that you can get, and currently, it is mapped at $625,500. In case you need more information on the reverse mortgage process, you can contact “America Reverse” and get your Free No Obligation Informational Guide. To qualify for a reverse mortgage you need to fit the following criteria:
- The borrower needs to be 62 years or
- The home you will use to get the mortgage needs to be your primary residence.
- The borrower should not have any federal debt.
- The borrower should be able to sort out all any ongoing charges on the property like taxes, insurance and ownership association fees.
- You will need to take part in a free consumer information session that is normally offered by an HUD Approved Home Equity Conversion Mortgage Counselor.
If you are interested in getting more information about reverse mortgages or need assistance in getting one, fell free to contact us and get your Free No Obligation Informational Guide. At America Reverse, we pride ourselves in offering our clients with the best quality service. Contact us today! Check out what Bill Medley from the Righteous Brothers to say about reverse mortgages.