A reverse mortgage is a loan that is specifically meant for home owners. They can take out the loan based off of the fact that you have equity in your home. Instead of you paying for your mortgage, you will be getting a pay check from owning your home.
There are multiple ways that you can choose to receive your payments. If you choose to get your payments through tenure, you will receive an equal amount each month as long as one person is still occupying the home.
The other major way to receive a mortgage is through a line of credit. If you choose this option, you are allowed to take out the amount of money that you want until your line of credit has run out. This can be a better option for someone who wants to control when and how much money they get. It can be an especially helpful tool for home owners who have paid their monthly mortgage for years, and need a little extra cash now.
The amount of money that you can borrow through a reverse mortgage depends on a variety of factors. Despite the facts that everyone has to be at least 62 years or older in order to qualify for a reverse mortgage, your age will still impact the amount that you can borrow.
If you are on the younger side, you probably won’t be able to take out as someone who is on the older side. Another factor that considers how much you can borrow is the current interest rate. Finally, the estimated value of your home and the fraction that you have paid will impact how much money you can borrow.
Age- In order to qualify for a reverse mortgage loan, you have to be at least 62 years old.
Type of home- Your home has to be either a single family home or a 2.4 unit home (at least one unit has to be owned by the borrower). There are also some condominiums that can qualify for a reverse mortgage.
Sometimes people confused a reverse mortgage loan with a home equity loan. However, they differ because a home equity loan requires you to have a steady income. A home equity loan will also require the borrower to pay a monthly fee based off of the interest. When you have a reverse mortgage, you are required to pay three main things.
This includes the property’s taxes, utilities, and flood/hazard insurance premiums. Another common misconception about reverse mortgages is that you cannot change your mind after closing. The truth is that you actually have 3 days after closing the loan if you want to cancel the reverse mortgage. This regulation is referred to as the “right of rescission”.
A reverse mortgage loan can be an awesome option for a home owner who is in need of some cash. When it comes to how much money you can borrow, you will be able to borrow more if you are older and the interest rates are lower.