People have started understanding reverse mortgage and its popularity is growing in America. If you do not know about reverse mortgage then it is a speciality mortgage. It helps the homeowner to use his or her home equity to get cash. It helps the older generation to become financially sound and gives them security so that they can be prepared for any emergency medical expenses besides several other costs.
The reverse mortgage is by HUD and in order to be eligible you have to be over 62 years of age and you should have paid off your mortgage or should have only a small amount remaining to pay back.
Homeowners can receive payment as they prefer. They can go for a lump sum payment or they can opt for a monthly payment for a specified period or for as long as they stay in that house. You can change this mortgage depending upon your circumstances.
This mortgage does not require for the seniors to make any repayments. The lenders will recover their principal amount as well as their interest when they sell the house. If there is any extra amount remaining then they will pay it to the homeowner or their survivor.
If the amount that they lender get after selling the house falls short of paying the borrowed amount, then the difference is paid by the HUD. The Federal Housing Administrations collects insurance premium from their borrowers so that they can provide for this coverage.
Now the amount that you can get as reverse mortgage will usually depend upon your age, rate of interest as well as the value of your property. This mortgage type will lend you more if you are older. Besides that, you will not need to produce any proof of income or present any sort of asset. Apart from that, you do not need to have a house of a certain value to be eligible for this type of mortgage.
You should be prepared to give about two per cent of your property’s value as an up-front fee. Apart from that, you will also have to pay one and half per cent of your balance amount of loan annually. However, the lender generally pays this amount and this is included in the total amount that you borrow as a homeowner.
This is an excellent option for seniors. They have worked their entire lives to be able to own their homes and therefore, the home is the one thing they have that will provide for their financial security when they need it the most.