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What Is A Reverse Mortgage?

A reverse mortgage is a type of loan which is available for seniors. This type of loan is used to take the home equity value out of a property in one bulk payment or in multiple payments. In simple words, you are turning the equity in your home into solid cash. This allows you to take out a loan against the equity in your home and you don\’t have to repay the loan for the entire lifetime until you reside in the home and do not sell it. This is the best solution if you would like to increase the money for your retirement and don\’t want to make monthly mortgage payments. In a reverse mortgage, the loan lender will be making monthly payments according to a percentage of the value in the property/home. Eventually, the lender will sell the home to recollect the money spent, once you do not occupy the home. There are different types of reverse mortgages available and some of them have a common theme. The following are common features found in these types of reverse mortgages.

  • If you are a senior, the chances of acquiring a higher loan amount would be very high.
  • You must pay off all other debts you may have. The only debt you should have must be the reverse mortgage.
  • The cost of financing will be included in the total value of loan.
  • The lender has the right to ask for a repayment in the case you do not occupy the home, or if you do not pay taxes or perform bankruptcy. You can not add another person in the home owner title of the home.

Certain types of home apply, such as a single family home, 2 to 4 unit properties, a home built after 1976, condominiums and townhouses. What you need to qualify for a reverse mortgage; be of 62 years of age, own a home and have enough equity in the home. Learn how you can increase equity in your home while young. Types of reverse mortgages available; HECM Loans, Non-HECM Loans, CHIP Loans. We will be discussing about these types of loans in another article entitled \”Types of Reverse Mortgages\”.

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