subject: 5 Facts How Do Reverse Mortgages Work [print this page] The reverse mortgages are home equity loans, which are getting very popular among senior Americans. That is a sign about the increasing need to make some extra money for daily living.
It tells also about the changed attitudes among senior people. They want to live a full life and the reverse mortgages offer a source of income for these purposes.
1. The Key Point About How Do Reverse Mortgages Work.
The key benefit, why seniors want to take these loans is, that they get cash money every month, or with the timetable they want, but they have not to pay monthly back payments. The reverse mortgages are also very liberal, because the lenders do not ask, how much income the borrower has nor what is his credit information.
2. The Capital, Interests And All Costs Will Be Paid Back, When The Last Home Owner Moves Away.
This is, what the reverse element means. When with the usual mortgage, the borrower pays the loan and interests back every month, with the reverse mortgages all costs, interests and the capital will be paid back when the last home owner will move permanently away and the home will be sold.
The difference between the sales price and all the costs will be paid to heirs. In some rare cases, when the sales price does not cover all the costs, the mortgage insurance will be used.
This is a compulsory insurance, which guarantees in all cases, that the lender will get his money and that in no cases the other assets of the borrower will be used to pay the reverse mortgages.
3. Can Anybody Apply For The Reverse Mortgages On House?
No, not at all. First, you must be American, age 62 or over and own a home, which is fully paid or the remaining mortgage is a small one.
All reverse mortgages will be taken against the equity of the home, i.e. the home value is the guarantee for the loan capital, interests and the costs. So the business idea here is, that a senior can change the part of the equity of the home into cash money.
4. The Reverse Mortgages Are Tax Free Income.
Actually this is how it must be. When seniors have paid the mortgage loans, they have paid the taxes once from their incomes, with which they have collected the money.
Now, when they use the reverse mortgages, they use these money, which they have saved. This is why they are and must be tax free income.
5. There Is A Compulsory Counselor Meeting, Which Is Useful.
The counselors for the reverse mortgages are official persons, who can guide you concerning all features of the reverse mortgages and especially to tell, what your personal situation requires.
They go through also the alternatives for reverse mortgages, the costs included and the detailed information. These meetings are very useful, especially when you are prepared.
You better discuss with your spouse and relatives. The Internet offers a great amount of useful information, both pros and cons.
by: Juhani Tontti
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