Figuring Out Options
Reverse mortgage whose other name is the HECM(home equity conversion mortgage)is a financial provision in the United States that offers senior citizens who have attained the age of 62 and above an opportunity to have their accumulated home equity used to add to their pension or retirement benefits. As compared to the traditional forward mortgages,reverse mortgage does not have monthly mortgage payments to be made.
The borrowers of the reverse mortgage must continue to reside in the property, pay the taxes and insurance of the property. The home equity continues to decline as the borrower receives payments which increase the loan balance.
A reverse mortgage is a loan like any other and it is eventually settled at the demise of the borrower or sale of the property. At any time at the course of his/her life, the borrower can choose to pay off the loan. The reverse mortgages are designed such that the loan balance at any time is not more than the value of the property. The borrower does not need to worry about the lender failing to remit the payments because these loans are fully guaranteed by the federal government the United States.
The reverse mortgage loan or the HECM finds strength in their ability to keep their requirements simpler than the other financial products such as the home equity loan or the mortgage refinance. If you want to apply for the reverse mortgage, you should be 62 years or older,you should be the sole owner of your home as well as using it as the main residence,the home should be housing a single family of up to four members and the house should be in good condition before taking the loan. In a bid to determine whether the product is suitable for your needs, you might be required to meet with a HUD-approved counsellor. The counselling sessions are expected to help you understand better how the reverse mortgage works and the other various financial options available for you.
Prospective borrowers also undergo financial assessment before they can qualify to ensure that the borrower is able and willing to pay for property taxes, basic home maintenance,home owner’s insurance and the Home Owner’s Association fees if and when they are applicable.
The value of the reverse mortgage depends on the age of the borrower, the property worth and the magnitude of the home equity one holds. The reverse mortgage can be paid to the borrower on monthly basis for a specific time or paid specified amount monthly for as long as the borrower lives or even a combination of more than one payment plan that suits the borrower’s needs.