The big question that goes on ringing in the elderly’s heads is this, “Is the reverse mortgage worth it?”. Reverse mortgages of course remain to be unfamiliar to many a people. So unfamiliar in fact that before any individual is fully allowed to apply for a reverse mortgage, counselling by an agent well-certified by the FDA has to be undergone. However, is the reverse mortgage such mystery that it should be shunned or discouraged? Let us take a look at what you are getting yourself into when taking in to consideration the reverse mortgage loan. Generally, this is a type of loan that allows you to acquire finances based on a property you own. The most easily relatable financial scheme is one which an asset is taken into consideration as guarantee and it is agreed upon that a loan can be acquired from the lender as well. The following are however, key to be noted:

• The reverse mortgage loan will only allow the borrower access to 60% of the funds within the first year while the traditional loan will grant full access to the loan immediately the loan request of the borrower has been granted by the lender or financial institution.

• In both loans, we see that an interest is attracted. However, during repaying of the loan, dealing with the reverse mortgage seems easier in the sense that if the loan acquired exceeded the monetary value of the home, the borrower will owe nothing more than the value of the home. With the traditional mortgage loan however, debt is carried forward and all money borrowed including the attracted interest must be paid.

The reverse mortgage loan also seems to have more stipulated guidelines and wholesomely only benefits the elderly person, who has a home in their possession. The common, unifying factor is the need for financial aid in form of a loan. After the first set of requirements is met, the following are important questions to ask one.

IS THE REVERSE MORTGAGE REALLY WORTH What is the limit of money lent?

Usually, the limit of money lent is tagged alongside the monetary value of the home.

What rates govern the reverse mortgage loan?

The rates of interest could very well be fixed or adjustable. Fixed rates are an agreed amount of interest, what is drafted and unanimously agreed between the borrower and the lender. Adjustable rates on the other hand can change based on factors which were considered by the lender before the loan was availed to the borrower.

What is the repayment scheme?

Unlike the traditional mortgage, there is no required monthly payment of the loan. However, the mortgagee is subject to vigorous vetting done to ascertain their capability to repay the loan. When the borrower passes on however, the home is sold and the loan is repaid. Any money that remains after repaying the loan is in fact accessible to the spouse of the borrower and the heirs of the same.

What if the borrower passes on?

The loan is automatically transferred to the spouse of the borrower, also ownership of the home as well. In no way whatsoever is the loan charged onto any affiliated party once the loan is due and the returns from sale of the home have not completely covered the loan repayment. The reverse mortgage scheme is in this way seen as a source of extra money and in this way, its purpose remains met.

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