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31
What Is Reverse Mortgage?
July 31, 2010 | Leave a Comment
What Is Reverse mortgage?
A reverse mortgage is a loan available to those with the minimum age requirement of 62. A reverse mortgage releases the home equity of one's home as either a lump sum or in multiple payments. However, what makes this mortgage unique is that the homeowner's responsibility to repay the loan is delayed until they either pass away, sell the house, or leave (to an institution such as assisted living).
In a traditional mortgage, the homeowner takes a monthly payment to their lender, after each payment their equity increases. After the term, whether it be 15 year or any amount, the mortgage will be payed off and released from the lender. However, in a reverse mortgage the process is flipped. The homeowner no longer makes payments and all interest is added to the home. The owner can choose to receive payments or receive a lump sum of the available equity for their age. Afterward, the debt on the house will increase each month.
There are no income or credit requirements for a reverse mortgage. However, the minimum age requires the borrower to be sixty-two. Also, the customer must pay off any existing mortgages with the revenue from the reverse mortgage and any personal funds. Also, a pending bankruptcy that has not been finalized will slow down the process. Before borrowing, applicants must talk to a third party financial counseling source approved by the Department of Housing and Urban Development. This mandatory counseling is a defense for the customer and their family, to make sure they know what a reverse mortgage entails.
A reverse mortgage is a wonderful way to begin or continue one's retirement. A reverse mortgage allows you to help pay off any other debts or previous mortgages. If you feel the a reverse mortgage is the next proper step in your life, make sure you consult a financial consultant before moving forward.
Trying to find the right Orange County mortgage Company with the experience you need, and the relationships you can trust? American Capital mortgage is here to fill your needs.
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