The reverse mortgage loan should comply with the following:
Prepayment in part or whole is permissible without any punishment during the time period of reverse mortgage loan. More specifically for this particular section there is no penalty payment of fees. Moreover it also applies to any other extra charges that might have had become due particularly on the reverse mortgage that is payable.
Fixed Interest rate and compound interest rate
California reverse mortgage mostly provides for an adjustable or fixed interest rate and in sometimes a combination of the two. It might also provide for interest that is amongst the categories mentioned below:
Interest that is dependent upon the property’s value upon the loans execution or loan maturity
Or mostly in changes that are between maturity and closing
A lenders servicer, designee or originator may include fees and costs that can be charged by the lender himself/herself upon the execution of the loan upon maturity or on a periodic basis.
Loan advances mentioned in the loan document
If incase any lender fails to provide the advances that are mentioned in the loan document along with the default amount after notified in the specific document. This will triple the amount to the borrower along with the amount being withheld added the legal rate of interest.
Due and payable loan on occurrence of any event:
If incase the home that is securing the loan is entitled to another person or is sold
The borrowers cease the occupation of the home as a major residence
The date of fixed maturity has occurred as agreed by the lender
Any event that risks the security of the lender
Repayment of the loan
Absence from residence under 60 days consecutive will not be causing the reverse mortgage to be duely payable
Consecutive absence for more than 0 days and around a year will also not cause the California reverse mortgage to be payable.
Right to collect loans by the lender will be as per the rules of the contracts of the loan. And according to the law any other circumstance that makes the California reverse mortgage loan duely payable.
It is advised to the lender to clearly and precisely mention in the loan agreement about the charge of any fee or interest till the commencement of the time when the mortgage becomes duely payable.
Applications to purchase annuity
The condition of purchasing annuity is by no means a condition for the purchase of a reverse mortgage loan. A person or any lender who is participating in the initiation process of the loan should not do the following:
Lender is not allowed to be associated or in any way linked to any insurance or financial activity until the loan lender has himself ensured that the people involved in the mortgage origination are not providing him with any futuristic financial product.
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