Before going through with a reverse mortgage, consult a financial advisor who can explain just what a reverse mortgage does and what happens to your homes equity. You should be informed as to what your reverse mortgage will give you and what you can expect to get.
What Part Of Your Lump Sum Settlement From Your Reverse Mortgage Is From Your Homes Equity?
The bank that is handling your reverse mortgage calculates your homes equity according to the going prices of property sold in your area, much like a real estate broker. From this sum, your current mortgage with another bank or with the same bank is subtracted. What you have is the amount of money that you can get from your homes equity. You should know that all liens or other encumbrances on your property will be paid by the bank handling your reverse mortgage before you are given your share of your homes equity.
Does A Reverse Mortgage Threaten Your Home Equity?
Once you have agreed and gone through a reverse mortgage, any additional equity that your home gets due to an increase in property values in your area will have no affect on your lump sum. You are given your share of your home from a reverse mortgage at the time of your mortgage deal with the bank, and you will be given no more money from your home even if the equity in your home goes up. Essentially, you have sold your home at the time of your reverse mortgage closing. Your homes equity was assessed at the time of your reverse mortgage any subsequent change on your homes equity will have no effect on the lump sum that you got at closing.
Related posts: