Senior homeowners may require money, as all other people do. However, the question to ponder upon would be how to acquire money without the need to repay in monthly instalments. Sounds like a dream come true for most people. However, the foremost requisite would be to have a clear title to the home. The other requisite would be to be of 62 years or above. As senior homeowners may not have any other source of income, they would be looking forward to seek reverse mortgage for their home.
What is reverse mortgage?
Senior homeowners would often find their most valuable asset to be equity in their home. However, reverse mortgage would cater you with a way to convert some part of your equity in the home into money. It would be a great mode to convert your primary residence into a line of credit or cash. It would also be known as home equity conversion mortgages. In case, you wonder how does a reverse mortgage work, read on.
Working of reverse mortgage
It would be pertinent to mention here that reverse mortgage is different from traditional mortgages. The major reason has been the mortgagor paying cash to the homeowner without the need for the homeowner to repay the loan in monthly instalments. The loan would be repaid when the homeowner moves out of the home, sells the property of dies. It would not be wrong to suggest that every state would be having its own mortgage restrictions. These limitations would be based on the enhanced value of the home.
Qualifications for reverse mortgage
In case, you wonder on the qualifications required for reverse mortgage, let us delve on the requisites. The foremost would be borrower to be of 62 years of age or above. Secondly, the home should be their primary residence. The home should be free of any mortgage, the loan should be paid in full or the remaining balance should be small. In event of small amount remaining, you could pay through the amount paid to you by reverse mortgage. You could undertake counselling with an approved counsellor to ensure they would understand the restrictions, obligations and terms of the loan. You should have adequate income for paying insurance, property taxes, homeowner’s fee, home upkeep and any other regular cost associated with home maintenance.
There are largely three kinds of reverse mortgages, namely, single purpose, proprietary mortgages and home equity conversion mortgages.
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