What Is A Reverse Mortgage
It is from the Federal Government. Do you need to re-pay the Reverse Mortgage? No, not as long as you remain in the subject property. And it is risk-free. One of the advantages of having the Reverse Mortgage guaranteed by the FHA, is that no matter what happens to the housing market, your loan is safe. That means if the value of your house actually falls below what the original note was, with or without the subsequent accrued interest you still are protected with the loan you originally obtained. The lender can never come back at you and change the parameters of the initial loan.
The Differences
With the standard forward residential loan, the borrower is required to make regular payments for a predetermined amount of time. These payments usually include the principal, interest, taxes and insurance (PITI). When a Reverse Mortgage is placed on a property, there is no longer a requirement to make a forward loan payment or any payment towards the interest. The concept of the Reverse Mortgage is to eliminate the need for qualified senior citizens to continue making normal monthly payment except for a sufficient payment (taxes and insurance) on their owner occupied residence. The Reverse Mortgage is not available to anyone less than sixty-two tears of age or for a second home or for an investment property.
How it ends
When the borrower no longer uses the subject property as their main residence, the loan (Reverse Mortgage) must be re-paid.
But never during the time the borrower resides in the subject property is their a risk or a requirement they must repay any part of the Reverse Mortgage.
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