How Its Works

How Does a Reverse Mortgage Work

A reverse mortgage is not something that many older individuals tend to know about, but it is something that can be greatly beneficial. However, a lot of homeowners try to sign up for a reverse mortgage without really being properly educated about it. Here are a few pieces of Reverse Mortgage Information that you should definitely know before signing on for one.

Here are the answers to some of important question about how it works.

  • What Is It?
  • How Much Can You Borrow?
  • How is the Money Distributed?
  • What Happens if the Homeowner Dies?

Qualify for a Reverse Mortgage

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What Is It?

A reverse mortgage is basically a homeowner’s loan for seniors over the age of sixty-two and it usually uses a portion of the homeowner’s home equity as collateral for the loan. To be eligible to receive a reverse mortgage, your home must be owned free of previously existing liens, and also able to be sufficient from the reverse mortgage. Existing mortgage balances can also be paid of using the funds of a reverse mortgage.

How Much Can You Borrow?

The amount of money you can extract will vary depending on factors such as how much you owe, how old you are, and the value of your home. It can also depend on current interest rates, and the appraised value of your home, as well as whether or not your area has mortgage limits. Congress and the Federal Housing Administration will ultimately evaluate you and determine your loan amount.

How is the Money Distributed?

Your loan money can be distributed in a number of different ways depending on preference. A few options are tenure, where you get monthly payments as long as you live in the home, as well as term, where you also get monthly payments, but only for a set amount of time. You may also choose to receive a lump sum, a credit line, or any combination of the options.

What Happens if the Homeowner Dies?

In general, the loan does not have to be paid back until the last remaining homeowner either passes away or moves out. At that point, the loan bounces to the estate, and they are given at least 6 months to pay off the loan or to sell the house in order to pay it off. The estate is not usually liable if the home does not sell for as much as the loan is for and it is usually dropped off at that point and the lender has to take a loss.

As you can see, there is quite a lot for you to know about Reverse Mortgage Solutions. It is very important for you to be completely educated about what exactly a reverse mortgage is before you sign your name on the dotted line and commit to it. If you are looking to apply for a reverse mortgage and are curious about where you would stand in terms of pay and process, find a Reverse Mortgage Calculator online, and consider these bits of information during your process.

Review the information laid out on Reverse Mortgage Qualifier

And then fill out the form above to see if you qualify