If you own your own house and are at least aged 62 and beyond, you can have the opportunity to avail reverse mortgage and turn your home equity into cash. Basically, the reverse mortgage loans allow you to apply for loan using the equity of your home. The good thing about this mortgage, you don’t have to repay for the loan for as long as you are living in it and have no plans of selling it. If you want to find solutions for your source of income, reverse mortgage is an option worth your consideration.
How It Works
With a reverse mortgage loans, the lender will make payment to the senior homeowner based on the percentage of the equity of the house. When the borrower dies or moves out of the property, the homeowner or his heirs may sell the house to pay off the loan; the homeowner or heirs can credit the existing to loan to keep the home; or the lender will allow selling of the home to settle the loan balance.
While reverse mortgage loans can come in many types, including those provided by private lenders, they usually share the following features:
- The older you become when availing reverse mortgage loans, the higher the loan amounts you receive. If you own expensive homes, you can also qualify for larger loans.
- The current house that you own will be your asset when you avail for reverse mortgage loans. Other mortgages must be paid off before you can avail this privilege.
- Financing fees can be included in the loan amount.
- The financer can demand repayment if the senior homeowner commits fraud, declares bankruptcy, abandons the property, fails to pay property taxes, fails to keep property insurance, or fails to maintain the current property condition. They may also request repayment if the senior takes more loans using the property, modifies the zoning classification of the property, leases part or all of the property, adds a new owner to the property’s title, or condemns his or her home.
During senior years, a retiree must have a financial adviser, lawyer or an adult child to give him constant advice on what to do especially with his or her estate. It’s also to ensure that reverse mortgage loans are really right for their needs.