subject: What Are Reverse Mortgages Main Loan Features [print this page] The target of the reverse mortgages is, that the seniors can get a much needed extra cash from the equity of their homes. These people are called cash poor, but equity rich. These loans use the capital, which a borrower has paid during many years in the form a normal mortgage.
1. Shall The Reverse Mortgages Change The Home Ownerships?
No, they will not. The reverse mortgages work in this respect in the same way, as the usual mortgages, but in a reverse way. They eat the equity, which a senior has paid. The loan capital, interests and all the costs will be paid, when the loan will be closed.
So the borrower must take care of the property taxes, home-owner insurance and for making property repairs. This happens, when the last borrower will sell the home, move away or pass away. Then the whole amount will be paid back using the selling price of the home. If it will not cover the whole sum, the obligatory mortgage insurance will pay the missing part.
2. The Loan Cost Financing.
The reverse loans have costs, which are bigger than, what the usual mortgages have. You can pay these upfront costs in the same package, when you will pay all the other costs, when the loan will be closed.
3. How Much You Can Get?
You can select the payment alternatives between these four. First, as a regular monthly payment during a certain amount of months or years, as a credit line, as a lump sum or as a combination of all or some of these. The maximum amount is $ 625.000.
The loan sum is tied with the following factors: the age of the borrower, the appraised value of the home and the interest level. We can say, that the older you are, the higher the appraised value and the lower the interest rate, the more you can get.
4. The Reverse Mortgage Must Be The Only Mortgage, You Have.
This means, that if a borrower has a normal mortgage left, he has either to pay it away or to pay it away with the reverse loan. The idea is that the borrower will have only one mortgage against the equity of the home. Because the loan is taken against the equity of your home, your income nor credit information is not asked, but you have to take a mortgage insurance.
5. Your Other Assets Will Not Be Used.
When the loan will be closed and it happens, that the selling price will not cover all the costs, then the missing part will be paid from the obligatory insurance. This means, that in no case your other assets will be used to pay back the reverse mortgage loan. So the lender cannot have a legal right to sell your other assets to cover the costs of the reverse loan.
What Are Reverse Mortgages Main Loan Features
By: Juhani Tontti
welcome to Insurances.net (https://www.insurances.net)
