Reverse Mortgage

Reverse Mortgage – An Overview

Retirees or prospective retirees who own a home can now increase their incomes through their homes. Many a times, retired home owners or senior citizens are concerned that their retirement savings or their social security income might not keep them immune from the effects of inflation.

What is Reverse Mortgage?

This is basically a reverse mortgage loan that is available to those who are 62 years and older. Herein, the home equity is released to the home owner in a lump sum or through multiple payments. The homeowner obligation with regards to loan repayment is deferred till the owner is no more, or the home is sold, or the home owner leaves the home.

The biggest benefit and idea behind reverse mortgage is the fact that the home owner makes absolutely no payments and all the accumulated interest is added to the lien on the property. This means that the debt on the property increases every month during the course of the owner receiving the reverse mortgage loan as bulk payment or in monthly payments.

Reverse Mortgage Facts

» The concept of reverse mortgage was specially established by the U.S     department of Housing and Urban Development in a bid to help senior     citizens and thus enable them to pay the rising living expenses and medical     costs.

» It allows home owners to borrow money on their home equity.

» The important qualification criteria for a reverse mortgage loan is that you     must be 62 years and older and also have outright ownership of the home. In     case where you don’t have outright ownership of the loan, you must have a     minimal amount of balance left on the current mortgage.

Benefits of Reverse Mortgage

A reverse mortgage loan does not require a borrower to make monthly repayments as long as he or she is living in the home. If the homeowner is deceased or decides to sell the home, then the lender recovers the loan amount and accrued interest when the home is sold.

The great thing about a reverse mortgage is that a borrower does not have to show minimum income or a fixed amount of assets in order to qualify for a reverse mortgage loan. As long as a borrower meets the qualifying parameters, they will get a HUD reverse mortgage.

A borrower, when it comes to a reverse mortgage, is not burdened by the prospect of repaying a loan on a monthly basis or paying a high interest rate. In fact, it is the banks that will pay you on a monthly basis or in a lump sum.

All in all, a reverse mortgage loan is one of the best ways that a senior citizen home owner can plan for the future and hope to meet the burgeoning expenses.