Senior Reverse Mortgage - What Is Really The Idea
To put it simple, the senior reverse mortgage is a special senior loan against the equity of the home
. The lender will pay the agreed amount of money every month or according to the schedule, which a senior have chosen.
1. There Is No Monthly Payments.
The target of the senior reverse mortgage is to add the disposable cash money every month. If a senior has a traditional mortgage left, he will pay that away with the reverse loan and that means, he will get more disposable money every month.
A senior can select, how he wants the bank to pay to him. The alternatives are as a lump sum, as monthly payments, as a credit line or as a combination of some or all of these. The financial needs will dictate the schedule, but actually nobody will ask, how he will use the money.
2. A Senior Will Keep The Ownership.
In this respect the senior reverse mortgage is similar to the usual mortgage. The question is about the loan, which will be taken against the equity of the home. A senior has in no case to pay the reverse loan payments by using his other assets, nor the bank cannot move the ownership.
3. When Is The Payment Time?
The loan is due, when the last borrower will move away or sell the home, or when he or she will pass away. Then the home will usually be sold and the loan capital and the expenses will be paid using the home selling price. If it does not cover all the expenses, then the mortgage insurance will be used. That is obligatory, so a senior cannot get the loan without taking that too.
4. Can The Senior Reverse Mortgage Eat The Whole Equity?
This is an important question for both the heirs and for a senior. Usually the loan amount will be only a certain part of the appraised value of the home, maximum $ 625.000. So the whole equity is not as a guarantee. And the home prices will increase during a long period of time, which will increase the equity usually more, than what the interest rates will increase the loan expenses.
5. Can A Spouse Become An Owner And Borrower Too?
Yes, it is possible. Usually the reverse loans are taken by the spouses, but actually three seniors can be the borrowers and the owners, but all must fulfil the qualifications. It is not needed, that these three are relatives to each other.
The reverse loans are full of small but important details, and that is why it is wise to contact the counselor to get the correct answers. Unfortunately the information online can include false and even harmful information, so the recommended action is to prepare a list of questions and to arrange a meeting with the federal counselor.
by: Juhani Tontti
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