Reverse Mortgage: Making Your Retirement Worthwhile

Reverse Mortgage: Making your Retirement Worthwhile

Reverse mortgage has been very useful to seniors in helping them their retirement meaningful.  They can have the chance to stay in better and comfortable place they could ever imagine.  As what the term says, a reverse mortgage is opposite of the traditional one.  Generally, the borrower gets a loan and pays the monthly due.  While in a reverse mortgage the lender pays either a lump sum or a stream of payments, made on a monthly basis, to the homeowner. 

Reverse mortgages have various qualifications and conditions.  Initially, the most important requirement is, you have to be 62 years old.  These loans are made purposely for seniors.  And the main goal of a reverse mortgage is to allow the senior cash out equity in their house without giving them the risk of possible foreclosure in the long run or getting a loan payment to make. 

In general, home equity loans need monthly payments.  When you get a second mortgage, this loan requires payment.  However, a reverse mortgage does not ask you to pay monthly as long as the borrower continues to use the property.  Payment made for the reverse mortgage is only needed when one of the three situations arise, the first one is if the borrower dies. Secondly is if the home is sold.  Then the third would be if the borrower is no longer staying in the house for certain reasons.  One common reason is the need of long term assistance.  Some other reasons can be associated to no payment required intended for the balance of reverse mortgage.  This means that there is no probability of default hence foreclosure. 

Reverse mortgages demand that any ongoing first or second mortgages of the property should be paid off first.  This normally occurs at closing with the first part of the reverse mortgage being used for such purpose.  The balance amount is then paid out to the borrower.  This can be made possible in one of these procedures.  One is if the borrower on a reverse mortgage can select to acquire such amount in a lump sum. 

Alternatively, the borrower can also prefer to take the proceeds in the monthly dues.  Such payments arrive at them on a monthly basis and are very much close to any annuity.  The amount available with a reverse mortgage is identified by several factors.  One is the age of the borrower.  The older the borrower signifies the higher the possibility of getting a reverse mortgage. 

In addition to that, the appraisal value of the home is also one factor that can determine the amount available for the loan.  The higher the value, then it is obvious that the more that you can probably borrow it.  If you opt to pay monthly, then the whole amount received is higher than that in a lump sum payment.  Another local factor that can influence the amount to be borrowed is the county. 

There are different good free resources on the internet that can further explain about the reverse mortgage proceedings.  These loans are perfect for seniors.  However, it is recommended and important to avoid abusive lenders.  HUD requires a free orientation for seniors before signing the necessary loan papers and contracts.  This education is very much essential and must be observe.