A Guide To The Basics Of Reverse Mortgage

A reverse mortgage is a kind of loan that can give you cash by tapping into the equity of your home. It may lack some of the lower rates and flexibility of other kinds of loans, however, they could be a great option in the right circumstances like if you are not planning to move or you won’t be leaving your house to your heirs.

Understanding Reverse Mortgage

Just like a standard mortgage, a reverse mortgage loan will use your house as a collateral. This type of loan is different in many ways. First of all, you will receive money rather than pay money to your lender. Then, the loan amount will grow as time passes by, contrary to shrinking with every monthly payment you would make on a typical mortgage.

The idea works just like a home equity loan or second mortgage, however, reverse mortgages are just available to homeowners who are at least 62 years old. You won’t have to repay this loan unless you decide to move out or if you die.

There are several sources for a reverse mortgage loan but one great option is the Home Equity Conversion Mortgage or HECM, which is available through the Federal Housing Administration. It is much less expensive for borrowers because they are backed by the government. Plus the rules for this kind of loan make it consumer friendly.

How Much Money Will You Get?

The amount of cash you’ll get from a reverse mortgage loan will depend on your home equity and the age of the youngest borrower. The more equity you have in your house, the more money can get. For many borrowers, it is ideal if they’ve been regularly paying their loan over many years and their mortgage is almost totally paid off. The youngest borrower’s age on the loan will affect the amount that you get. Older reverse mortgage borrowers will get more cash. But you have to be careful especially if you are tempted not to include somebody younger so you could get money. A younger spouse need to move out once the older borrower dies in case the younger person is not included on the loan.

How To Get Loan Payments?

You have a lot of options when it comes to how you can get your reverse mortgage Greenville loan payments. You can take the money in a lump sum. If you take this option, your loan will have a fixed interest rate and your loan balance will continue to grow over time while the interest accrues.

The other option is periodic, regular payments like once a month. These payments are called tenure payments and they can last for your whole life or you can receive them for a specific duration like 10 years.

You could also go for a lineof credit instead of taking the cash right away. This will let you draw the funds in case you need them. One good thing about this option is that you will only pay the interest on the money that you have borrowed, and that means your credit line could grow as time goes by. You can also use a combination of options like a lump sum and a line of credit.

Call Reverse Mortgage Specialist if you wish to know if this type of loan is the most suitable option for you.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/