Learning About Reverse Mortgages
A reverse mortgage is a way of freeing up some of the money that is invested in a home, without having to sell and move. This means that it is possible for the borrower to remain in their own home while gaining access to funds that can be used for living expenses, medical care or making their retirement more enjoyable. Many people own valuable homes, but need access to some extra money. Borrowing through a reverse mortgage is a sensible way of using a property to obtain funds while remaining at home.
A reverse mortgage is a loan that can be taken out by a senior homeowner, but which does not need to be repaid until the house is sold. The money can be received in a single lump sum or as a series of monthly payments. It is also possible to open a line of credit, from which more money can be borrowed as necessary.
The borrower remains in control of their home. They can decide to sell whenever they want to, and the lender never owns the house. When the property is sold, by the borrower or the beneficiaries of their will, the lender is repaid, with interest, from the proceeds of the sale. Any additional money that is made belongs to the homeowner.
The minimum age to be eligible for a reverse mortgage is 62. If the home is owned by a couple, both the husband and the wife must be at least 62 years old. You can take out a reverse mortgage on a condo, townhouse, single-family home or some multi-family homes. The bank will have the home appraised prior to the reverse mortgage to determine how much the borrowers can take out of their home.
Appraisals are necessary to determine how much the borrower(s) can recieve at closing. Other factors include: any exisiting mortgage that must be paid off, how old the youngest borrower is and the current reverse mortgage interest rate.
There are some upfront closing fees that are charged to the borrower. These fees are also used to calculate the benefit that borrowers can receive. Generally, these fees are financed into the loan and are not considered out of pocket expenses. Costs can vary from lender to lender, so it is important to shop around for the best rates and lowest expenses.
Always make sure you understand all of the aspects and costs of a reverse mortgage and choose a dependable lender who will answer all of your questions.
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