The reverse mortgage was created specifically for senior citizens, but not all of them understand what it does and how they can avail of it. This type of mortgage is complicated if you do not have a knowledge of it. If you want to be enlightened with facts about reverse mortgage, then continue reading on this article.
As I’ve said earlier, reverse mortgage can only be availed by senior citizens. However, only those with equities on their homes are qualified to take this. The equity may be paid either in lump sum or on a staggered basis. This depends on the preference of the senior citizen and on the amount of equity he has on his property.
In a reverse mortgage, unlike any other mortgages, there are no monthly mortgage payments. The mortgage provider will only get paid in the event that the home owner dies, decides to live with his or her family, or moves out of the house.
There are only minimal requirements in a reverse mortgage. First, the mortgagor or the borrower must at least be 62 years of age, and second, the mortgagor has to undergo a counselling session with an HUD-approved counsellor. The counselling service’s aim is to ensure that the mortgagor understands fully how a reverse mortgage works. He or she is will be made aware of his or her legal as well as financial obligations once granted of this type of mortgage. There is no minimum income required in a reverse mortgage loan.
Senior citizens can gain several benefits from a reverse mortgage, but what holds back a lot of people is the fact that the home will be taken away from their family once they die. However, the family or heirs of the mortgagor will still have a chance to keep the home provided that they refinance it. This means that the reverse mortgage will be converted into a traditional mortgage.
Another way for the family or heirs to keep the home is that the mortgagor can increase its life insurance policy. This is to ensure that when he or she dies, the people left behind can afford to pay the mortgage and still occupy the property.
Reverse mortgages can help a lot in the financial needs of senior citizens, especially to those who are not anymore earning an income. They still can have financial stability through the equity on their property.