By Corey Slocumb
A reverse mortgage is one of the types of mortgages available to homeowners who are deemed eligible to apply. With these mortgages, a loan is provided based on the amount of equity a property has. Borrowers can choose to receive their loan as one large lump payment, a line of credit, or as monthly payments. These mortgages are secured by using the home for loan collateral.
The real property value is what the equity amount is. To find the real value, you determine the difference of the market value and any lien balances on the property. For an existing home loan, the balance is reduced by payments and the equity will increase with lower balances and higher market values.
As the name suggests, these mortgages work opposite from traditional ones. Typically, normal home loans involve principle and interest amounts that require monthly payments that reduce the total balance of the loan. In contrast, these reversed loans do not require payments until the loan has matured. By this time, the loan can be repaid through the sale of the home.
Although these loans require the home as collateral, you still own the home. As such, you are still responsible for paying property taxes and homeowner's insurance. While there are not required payments on the loan, repayment may be demanded if the homeowner does not pay the taxes, does not maintain the property, or does not keep insurance on the home. If everything remains taken care of, repayment will not be necessary until the last remaining property owner becomes deceased, the home is sold, or the home is permanently vacated.
There are a few requirements that must be met for homeowners to be eligible. Owners have to be aged 62 or older and own the property or have paid a substantial amount on an existing mortgage. The home must be occupied as a primary residence. Owners should not owe any federal debt and have proof of insurance and up-to-date tax payments. If all the requirements are met, the homeowners can choose how to receive the loan payments.
Term and tenure payments are monthly payments that will either be for a certain amount of time or for as long as one borrower still lives. A line of revolving credit provides payments based on when the borrowers need the funds. Modified term payments are a combination of revolving credit and fixed term monthly payments. The modified tenure payment is a combination of monthly payments for a lifetime and a revolving credit line.
Counseling courses are required for potential borrowers in the United States, and highly recommended for borrowers in other countries. These counseling courses teach people everything they should know about these mortgages, including all the important, but sometimes confusing, details. After completion, a certificate is issued that will need to be given to the lender handling the loan.
It is vital to consult a professional, such as a reverse mortgage lender or financial consultant, before you start applying for these mortgages. You need to understand not only the general picture but also all of the small details. Applying for any home loan is not an effort that should be taken lightly. Ensuring you are informed helps you make the right decisions.
The real property value is what the equity amount is. To find the real value, you determine the difference of the market value and any lien balances on the property. For an existing home loan, the balance is reduced by payments and the equity will increase with lower balances and higher market values.
As the name suggests, these mortgages work opposite from traditional ones. Typically, normal home loans involve principle and interest amounts that require monthly payments that reduce the total balance of the loan. In contrast, these reversed loans do not require payments until the loan has matured. By this time, the loan can be repaid through the sale of the home.
Although these loans require the home as collateral, you still own the home. As such, you are still responsible for paying property taxes and homeowner's insurance. While there are not required payments on the loan, repayment may be demanded if the homeowner does not pay the taxes, does not maintain the property, or does not keep insurance on the home. If everything remains taken care of, repayment will not be necessary until the last remaining property owner becomes deceased, the home is sold, or the home is permanently vacated.
There are a few requirements that must be met for homeowners to be eligible. Owners have to be aged 62 or older and own the property or have paid a substantial amount on an existing mortgage. The home must be occupied as a primary residence. Owners should not owe any federal debt and have proof of insurance and up-to-date tax payments. If all the requirements are met, the homeowners can choose how to receive the loan payments.
Term and tenure payments are monthly payments that will either be for a certain amount of time or for as long as one borrower still lives. A line of revolving credit provides payments based on when the borrowers need the funds. Modified term payments are a combination of revolving credit and fixed term monthly payments. The modified tenure payment is a combination of monthly payments for a lifetime and a revolving credit line.
Counseling courses are required for potential borrowers in the United States, and highly recommended for borrowers in other countries. These counseling courses teach people everything they should know about these mortgages, including all the important, but sometimes confusing, details. After completion, a certificate is issued that will need to be given to the lender handling the loan.
It is vital to consult a professional, such as a reverse mortgage lender or financial consultant, before you start applying for these mortgages. You need to understand not only the general picture but also all of the small details. Applying for any home loan is not an effort that should be taken lightly. Ensuring you are informed helps you make the right decisions.
About the Author:
Learn more about the senior mortgage. Stop by this site where you can find out all about it.
0 comments:
Post a Comment