A reverse mortgage is a loan that can be taken out on a home if the owner is 62 years old and over. The equity on the home is converted into cash.
A Reverse Mortgage is basically a loan that a homeowner can take out on their home where the loan consist of the equity available on the home is converted into cash. The homeowner has to be 62 years and older and they can have the loan to use for anything they want to use it for and it does not have to be repaid unless they sell the home or die.
Qualifications
In order to get a Reverse Mortgage loan the homeowner must be 62 years and older. The amount of the loan is determined by the value of the home and the mortgage rates. The money from the loan must first be used to pay off any balance left on the loan then the remainder is given directly to the homeowner.
Selling the Home
An individual with a Reverse Mortgage can sell their home and then purchase a smaller home if they wish. The original home is paid off with the reverse mortgage depending on the amount of the loan. Therefore a homeowner can sell their home, but if they do decide to sell they are required to repay the loan that they received. The idea of selling the home might not be the best bet if all of the money received from the loan has to be repaid. It seems to defeat the whole purpose of getting the loan in the first place.
One suggestion is to sell the home and buy a smaller one, that way the remainder of the money can be returned to the lender and that way the owner only has a portion of the money to repay.
Conclusion
In most cases many people apply for the HECM-Home Equity Conversion Mortgage through HUD. The first thing to do before considering a reverse mortgage is to consult with a mortgage counselor that specializes in reverse mortgages. Shop around and get the best advice to serve a particular situation.
Related posts: