What is a Reverse Mortgage?

Another name of reverse mortgage is lifetime mortgage. This is a type of loan that is given only to the senior citizens. This loan can be utilized to make your home equity in the property free in lump sum or in multiple payment modes. The best part of this reverse mortgage is that the responsibility of the home owner to repay the loan amount can be postponed till they die, or the home is auctioned or if the owner leaves the house.

In the normal mortgage the owner of the home has to make monthly EMIs decided by the lender and after every repayment of their mortgage the equity of their property increases and after the mortgage is been paid in full (i.e. after 30 years) the lender releases the property and hands over the property papers to the owner of the home. But in the reverse mortgage the borrower does not have to pay any EMIs and the entire interest is being added to the property’s lien. However, if the borrower receives any EMIs or huge repayments for their available equity percentage then the liability on the property will automatically get increased every month.

However, if the property value increases after the reverse mortgage then they are allowed to take another mortgage over the increased equity of the house. But for some country like United States of America reverse mortgage means conventional mortgage on the property.

The additional fund that will be gained through the reverse mortgage can be utilized for any purposes. Some of the purposes are paying off the unsecured debts and any other debts, Home repairing and home renovation, expenses for living, traveling, long term care or any health care, lessening the financial burden on your children, further educational studies, also for your hobbies, and also for rising property taxes.

According to a report it has been found that the biggest figures of this reverse mortgage come from Arizona, Florida, and California. This reverse mortgage is very popular and helpful for the senior citizens who can not repay their loan amount, this mortgage provide great help to those people, this is just like a special loan for the elderly people. This is very helpful for the elderly people because if they take this mortgage then they can ignore making monthly payments for the loan.

There are certain things that you have to keep in mind while taking reverse mortgage. First is when the foreclosure intimidates then it is essential to act quickly. Home foreclosure should be considered seriously. If you home is foreclosed then your credit rating will definitely drop down by 250 to 300 points for nearly about 8 to 10 years. Moreover, a senior will never overcome from it and will lose his/her home. So there are many things at stake. If this is the reason then why a senior citizen can not pay off their loan amount that is been taken against their property, in such case the reverse mortgage will really help those elderly people.

If your loan repayments are three months behind, then it is very important to act very quickly and try to get in touch with with your lender. As soon as the proposal comes from the borrower (i.e. you) then immediately they have recommendation regarding solving your financial problem by providing you with loan. On the other hand the lender will definitely perform at the level best to ignore foreclosure procedure.

So it is a great notion to pay off your current mortgage with the help of the reverse mortgage, if you decide to pay off your current loan with reverse mortgage then it will also help you to ignore the monthly EMIs. If you think this process is enough to carry an elderly people over their financial problem, then definitely taking a reverse mortgage will worth them.

Second is who can qualify for this loan. It is also recommended that before you obtain this loan you should know properly What Is Reverse Mortgage? There should be sufficient equity left on your property to take this loan. This means that the credit rating and the income level of the elder people does not make any sense and are not even asked when they take reverse mortgage. The only thing that qualifies them to take this loan is their age which should be over 62 years and should be the owner of the house.

Third is what the real help from this reverse mortgage is. It is really a great help for the elder people who are in need and want to eliminate their financial problems. With the help of this reverse mortgage a senior can change their home equity in to cash amount, and this process is too easy and simple which on the other hand help them to ignore losing their home and also a good credit score will be maintained. With this reverse loan the borrower still remains the owner of their home.

In this reverse loan there is a limitation of borrowers, a lender can only lend money to three persons of the same property. Another important thing is that the three borrowers should not be relatives to each other; they should have blood relationship with each other and should also be the owner of the property. Of course the same criteria is applicable for all the people i.e. they should have complete qualifications, they should be an American citizen and above 62 years.

Fourthly, you might be wondering that from where a senior can get help. But the United State of America had prearranged this facility in magnificent way. If you are interested in such type of loan then you should approach the federal counselors for the same, they are many counselors available nowadays all over the country. The best thing is that these federal counselors do not work for the lenders and they are not in the payroll of the lenders. These counselors are totally free and independent to offer and guide you with accurate information regarding reverse mortgage.