subject: Reverse Equity Mortgage - Answers To Senior Retirement Questions [print this page] The basic requirement for the reverse equity mortgage is that a home owner, must be age 62 or over, own a home and to live there permanently, which normally means at least six months per year. It is natural, that there is equity left in the home, because that is the source of the money.
The main benefit of the reverse equity mortgage loan is, that a senior can get cash money from the equity of his home. When he thinks about his needs, he can decide, whether he takes the money as a lump sum, as monthly payments, as a credit line or as a combination of all these.
1.Shall I Remain As An Owner?
Yes, you will. The reverse equity mortgage is a home loan, which you will take against the equity of the home. You will remain as an owner, which means that you must take care of all the insurances, taxes, repairs and to keep the property in a good shape. If you do not do those duties, the lender can close the loan and the home will be sold.
Actually, there can be maximum three owners on the title, but all of them must fulfil the requirements and at least one of them must live in the home permanently. All owners have the same duties to take care of the home until the last owner will pass away or move away permanently.
2. Can I Refinance The Loan Later?
The senior equity reverse mortgage loan allows, that a senior can refinance the loan later. For instance, if he has taken a loan with a fixed interest rate and the market rates are lower, he has an interest to refinance the loan to get better terms.
3. How Can I Use The Money?
The senior equity reverse mortgage loan is taken against the equity of your home. That is a guarantee for the lender, that he will get his money. This loan is not taken for some specific purpose, so you can use it for the purpose you want. Actually, you can decide, whether you want the money as a lump sum, as a monthly sums, as a credit line or as a combination of all these.
When a senior thinks the nature of this loan and about its long term influences, it means that he will use the loan for real needs, like for his medical bills or home repair. Some seniors use the money to buy a home for their child, for instance.
4. How The Interests Are Calculated?
The lender will charge the interests along the agreement, which you have signed. There are basically two alternatives to calculate the interest, the variable interest rate and the fixed interest rate. You will pay interest about the amount of money you have taken from the loan. All interests will be paid back, when the loan will be closed, not earlier!
by: Juhani Tontti
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