All You Need To Know About Reverse Mortgage And Its Requirements.
A reverse mortgage which is also referred to as HECM(Home equity conversion mortgage) is a financial service in the United States which allows homeowners 62 years or older to use their accumulated home equity to supplement their pension or retirement income. As compared to the traditional forward mortgages,reverse mortgage does not have monthly mortgage payments to be made.
The borrowers of the reverse mortgage must continue to reside in the property, pay the taxes and insurance of the property. The home equity continues to decline as the borrower receives payments which increase the loan balance.
A reverse mortgage is a loan like any other and it is eventually settled at the demise of the borrower or sale of the property. If the borrower wishes to pay off the loan at any time, he or she still has the right to do so. The reverse mortgage is conveniently designed such that the loan balance cannot exceed the value of the home. The borrower does not need to worry about the lender failing to remit the payments because these loans are fully guaranteed by the federal government the United States.
Unlike other financial products like the home equity loan or the mortgage refinance, the HECM or the reverse mortgage loan have simpler requirements to meet. If you want to apply for the reverse mortgage, you should be 62 years or older,you should be the sole owner of your home as well as using it as the main residence,the home should be housing a single family of up to four members and the house should be in good condition before taking the loan. In a bid to determine whether the product is suitable for your needs, you might be required to meet with a HUD-approved counsellor. The counsellor will help you to understand deeper how the reverse mortgage works as well as helping you to explore other possible alternatives that could be available at your disposal.
Prospective borrowers also undergo financial assessment before they can qualify to ensure that the borrower is able and willing to pay for property taxes, basic home maintenance,home owner’s insurance and the Home Owner’s Association fees if and when they are applicable.
The age of the borrower,the value of the property and the value of home equity are the main factors that determine the amount the amount the borrower is eligible for. You can choose to receive the loan in lump sum or monthly for specified time or a specific amount as long as you live in the house or even combine two or more payment plans that suits your needs.