What You Need To Know About Mortgage Types Before Applying For A Loan A mortgage…
There are more and more seniors these days who are really struggling to make ends meet. Not only do they struggle to live on a fixed income, but now thanks to the depressed economy the situation for some is dire. Interestingly enough, a good percentage of these seniors who are laboring under a serious financial burden have a great deal of equity in their homes but are not aware of how easy it can be to access that in cash. Nowadays, there are many reverse home mortgage loans that seniors can take advantage of to help ease their financial woes.
One option that seniors who have their homes paid off, or that have a very low balance on their mortgage, can certainly take advantage of is to take out another mortgage or access their equity through a home equity line of credit. However, many seniors are rather averse to getting into more debt and increasing their monthly outgo at their age.
This is just the type of scenario that makes a reverse home mortgage loan really attractive for senior citizens. These kinds of reverse home mortgages are available only to those who have reached the age of 62 or more. All of the owners on the property’s title have to meet this age requirement in order to start the process by filling out the reverse mortgage application in the US. Other countries might have different qualifications.
Reverse mortgage benefits can even extend to those who are having so much financial difficultly that they are facing foreclosure. Because there are no income or credit qualifications to meet, a senior homeowner can easily tap into the equity in his home to pay off the balance of his mortgage, in order to keep the home from going into foreclosure. However, it is important to move fast and not let the mortgage get too close to foreclosure.
Regardless of whether there is danger of a foreclosure or simply a balance on an existing mortgage, the first thing that is paid out from the proceeds of a reverse mortgage is any outstanding loan balances or liens that are on the home. Once the home is completely free and clear, the senior homeowners can then decide how they want to receive their payments. They can choose to receive an amount each month that can supplement their monthly income, or they can get a lump sum if they have a need for a chunk of cash.
One thing to consider is the interest that is charged on any amount that is received. If the homeowners get all of the available equity out of their home in a lump sum right up front, then they will pay more interest than if they receive payments each month. However, the interest is not paid during the life of the homeowner, but only accrues and is paid when the reverse loan comes due after the death of all who are on the title and who have taken out the loan.
A reverse home mortgage loan can be a terrific way for older people to be able to remain in their homes that have become so dear to them, but which have also become somewhat of a financial burden. If for some reason a homeowner does decide to move and subsequently puts the house on the market, then they will have to pay off the reverse loan at the time of the sale, which should be covered easily.