Reverse Mortgage

A financial agreement in which a homeowner relinquishes equity in their home in exchange for regular payments, typically to supplement retirement income.

What is Reverse Mortgage?

A reverse mortgage is a loan available to homeowners, 62 years or older, that allows them to convert part of the equity in their homes into cash.The product was conceived as a means to help retirees with limited income use the accumulated wealth in their homes to cover basic monthly living expenses and pay for health care. However, there is no restriction how reverse mortgage proceeds can be used.The loan is called a reverse mortgage because instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower.

Why Do You Need Reverse Mortgage?
Maintain Living Standards

Income

Senior citizens get income after retirement. Loan up to 60-90% of property value may be sanctioned.

Low on Price

Tenure

If you outlive the tenure of the loan, you continue to stay on the property. Ownership continues to remain with you.

Rider Benefits

No Tax

The amount you receive under reverse mortgage is a loan and not an income. You do not have to pay any tax on these amounts.

Tax Benefits

Emergency Money

Money can be used for medical and other emergency treatment. Useful as an income after retirement.

Frequently Asked Questions Regarding Reverse Mortgage Eligibility:

• If the homeowner is under 62 years of age but they are on permanent disability, do they qualify?
o No. The minimum age is 62 years and there are no exceptions for disability or Social Security status.

• Can a homeowner that has a mortgage still get a reverse mortgage loan?
o Yes. Many people who obtain a reverse mortgage loan use it to pay off their exisiting mortgage and eliminate monthly mortgage payments.

• Does every homeowner over age 62 qualify?
o No. Many people who want a reverse mortgage loan may not have enough equity in their home to qualify or may not meet other eligibility requirements.

• What if there is too little home equity to qualify?
o A “shortfall” means that the reverse mortgage loan would not generate enough loan proceeds to cover the existing mortgages on the home. In this situation, the homeowner cannot get a reverse mortgage loan until the balance of their existing mortgage is lowered or paid off. If they have money available, they can “pay down” their mortgage balance to qualify for the reverse mortgage loan.

Borrower Requirements and Responsibilities:

Age Qualification

All borrowers listed on title must be 62 years old. If one spouse is under 62, it might be possible to get a reverse mortgage. However, the loan officer will need to collect additional information upfront to determine eligibility.

Primary lien

A reverse mortgage must be the primary lien on the home. Any existing mortgage must be paid off using the proceeds from the reverse mortgage.

Occupancy Requirements

The property used as collateral for the reverse mortgage must be the primary residence. Vacation homes and investor properties do not qualify.

Taxes and Insurance

Borrowers must remain current on real estate taxes, homeowners insurance, and other mandatory obligations, including condominium fees.

Property Condition

Borrowers are responsible for completing mandatory repairs and maintaining the condition of the property.

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