The 5 Facts To Use Reverse Mortgage For A Careful Retirement
The reverse mortgage is meant for a senior, who is at least 62 and owns a home
, which is his or her permanent home and which has equity left. Equity means the difference between the appraised home value and the mortgage left.
If a senior has a normal mortgage, he must pay it away with the reverse loan. A senior can choose either a variable or fixed rate loan and the reverse loan has no repayments during the running time. Also all interests and fees are paid after the running time.
When a senior will sell the home, move or pass away, the home will be sold and the loan capital, accrued interests and fees will be paid back. The remaining sum goes to a borrower or to heirs. The lender pays either as a lump sum, as the monthly payments, as a credit line or as a combination of these all. The borrower will stay as an owner and altogether 3 borrowers are allowed, but all must qualify.
1. Use A Reverse Mortagage Option As A Reserve Plan.
If a senior does not need an extra money right away, he can prepare the plans, meet the counselor and learn the facts for the future. This makes the financial planning carefree, because he or she knows, that he can release money from the home equity, if needed.
Or he can buy a new home with the reverse loan to get more disposable money. Then he will sell the old home, use a part for the downpayment and to take a new reverse mortgage to finance the bought of a new home. Now he will avoid the monthly loan payments of the home.
2. A Senior With Bad Credit Will Also Qualify.
The only guarantee for the reverse loan is the home equity. The qualification does not need the income or credit information. This means that a senior, who has a bad credit score, but who owns his home with an equity, can qualify. This also mean, the a senior with bad credit can buy a new home, if he has the cash for the downpayment.
3. A Senior Can Benefit From The Home Price Increases.
After a senior has taken the reverse loan he will remain as an owner of the home. This means, that despite of the fact, that the reverse loan eats the home equity, a senior can enjoy about the home price increases, which bring accrued increases during the many years of the running time.
4. A Credit Line Option Gives The Flexibility.
A credit line means, that the loan can be used, whenever is needed. This gives flexibility especially if a borrower does not know or cannot corecast how his living expenses will be developed.
5. Make A Realistic Plan.
The reverse mortgage is a serious, long term commitment and must be planned carefully. The reverse loan will eat a part of the home equity and willdecrease the money, which goes to the heirs. It can also influence on the Medicaid eligibility. For these reasons it is important to meet the reverse mortgage counselor to get the facts about all features.
by: Juhani Tontti
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