Reverse Mortgage - The 5 Key Features To Remember
The reverse mortgage loan has quite big upfront costs
, which has given it an image of an expensive product. But if you think, that you keep owning the property, it means that the price increases of the property come to you, they compensate partly those upfront costs.
1. Check Your Home Value.
The appraised value of your present home is the starting point, when you start to think the reverse mortgage loan. During the tough economic times it may be a surprise, how much the home prices have fallen. However, this is temporary, because during the long term the homes are good investments.
If you will find out, that the prices have decreased and if you have a chance, it can be a good idea to postpone the reverse mortgage decision with a couple of years. If you own your home debt free, you cannot use the whole equity with the reverse mortgage loan.
2. The Factors, Which Determine How Much You Can Get.
The law says, that the maximum sum is $ 625.000. The factors, which will determine how much you will get are your age, the appraised value of the home and the interest rate level. The older you are, the higher the appraised value and the lower the interest rate, the more you can get, but highest that $ 625.000.
3. How You Can Use The Proceeds.
The idea of the reverse mortgages is to arrange more disposable cash money to seniors age 62 and over. The equity of the home is the only guarantee asked. The reverse loan can be used free, i.e. a senior has not to report to anybody, how he or she has used the money. Somebody buys a flat to the child, some pay for a medical bills, some home repairs etc.
4. The Obligatory Counseling.
The Federal Government has ruled, that every senior, who wants to take the reverse mortgage loan, must meet the federal counselor. Because the counselors are not in the lenders payrolls, the meeting can be very useful. A senior makes it wise, if he will prepare carefully for the meeting with a question list. The counselors are top experts, but a senior has to make the final decision whether he will take the loan or not. Seniors, who have already taken the reverse loan can help a lot and it is wise to talk with other people.
5. Your Income And Credit Score.
One thing is very good, the lenders will not ask your credit score nor the incomes, because the loans are taken against the equity of the home. This makes the loans possible also for people, who have had financial difficulties, if they own their home and if they have equity left.
If a borrower, or maximum three borrowers, have a traditional mortgage left they have to pay it away with the reverse mortgage loan. When the reverse loan will not be paid back with the monthly installments, this will release cash money every month.
by: Juhani Tontti
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