How Does A Reverse Mortgage Work
If the equity of the home is not the only source of the cash money
, a senior can go through other alternatives as well. But after he has decided to take the reverse loan, it is important to understand how does a reverse mortgage work.
1. Collect All The Available Information.
When a senior thinks how does a reverse mortgage work he will notice, that there is not a one single truth, but he will get a lot of opinions from different people. This means that he has to make the decision based on these things.
The information sources play an important role in the decision making. One reliable source to start with is the federal counselor, who has been trained and who has a wide experience about the reverse mortgage guidance. He can give contact information about other reliable information sources.
2. Are You Able To Qualify?
The government made the qualification easy. The idea was to help financially the seniors, who are cash poor but equity rich by allowing them to turn a part of the home equity into cash money with the payment schedule they have decided. So if you are at least 62 and own a home, where you live permanently and where you have equity left, you can qualify
3. How Much You Can Borrow?
The maximum loan sum depends on the appraised value of the home, on your age and on the interest rates. We can say, that the older you are, the higher the appraised value of the home and the lower the interest rate, the more you can get. However, the maximum sum is $ 625.000.
4. Can My Spouse Become A Borrower Too?
Yes, she can. Actually altogether three borrowers are allowed and all of them must meet the qualifications, i.e. to be at least 62 and to be the owners of the home. The loan will be closed, when the last borrower will sell the house, move away or die.
5. Can I Deduct The Interests In My Taxation?
When we think the reverse mortgage system, we notice that all the costs, including the paid interests, will be paid, when the loan will be closed. This happens when the last borrower will move away, sell the house or die. Then the house will be sold and all the costs will be paid from the selling price of the house, including the interests. Only after this, the borrower can deduct these sums in his taxation.
by: Juhani Tontti
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