What is a Reverse Equity Mortgage?
According to layman, reverse equity mortgage is considered to be opposite of traditional mortgage. In traditional mortgage, borrower has to pay the loan amount back to the mortgage company in the form of monthly payments, but in reverse equity mortgage, the mortgage lender makes payment to the senior citizens above 65 years of age and are looking for reverse mortgage. The loan amount of reverse mortgage is based on the equity remaining on the home of borrowers, which is the difference between market value of the property and mortgage taken on the property. The loan amount is only paid off, when the home is sold.
The senior citizens need not have to repay the loan of reverse equity mortgage until they are alive and are residing in the home. But still there are couple of things, need to be remembered that full amount of reverse mortgage is only repayable when the house is sold, home owner is not residing in the house for more than 12 months or due to expiry of home owner. At that time, full and final payment is received by the mortgage lender for reverse equity mortgage including accrued interest amount.
Reverse equity mortgage need to be considered as first mortgage. If the current loan amount is less than 50% of the total market value, then mortgage balance need to be incorporated into reverse equity mortgage, which clearly indicates that senior citizens are possibly relieved of their present mortgage.
How to get eligible for Reverse Equity Mortgage?
The borrowers, who are senior citizens with age of 62 years, can apply for reverse equity mortgage. They need to take this important thing into consideration that no bankruptcy has been filed and they need to have good credit report. There should not be any personal liability for reverse equity mortgage.
How to apply for reverse equity mortgage?
The reverse equity mortgage is provided to senior citizens in different ways, which are enumerated as follows
- Providing lifetime monthly payments to senior citizens, in order to meet their basic requirements.
- Provide lump-sum amount for any purpose.
- Helps in maintaining future line for any purposes.
There are some of the major reverse mortgage lenders, which have various programs in providing reverse mortgage according to the criteria of loan amount can be provided in reverse mortgage
- Providing variable rate at the time, when reverse mortgage is originated.
- Considering the age of youngest home owner.
- The market appraisal value of home.
- The reverse mortgage loan amount limit set by the lenders.
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