Basic Features of a Reverse Mortgage Loan For Seniors
By Rob K. Blake
Before you apply for a reverse mortgage, you have to seriously study it first and make a thorough calculation of its value. Some people are lulled by the fact that getting money from this loan seems too easy. Always remember that reverse mortgage should be treated as a long term investment. To understand this financial option, here are some facts that you need to consider.
Guarantee for the Loan
Your home is the only guarantee for this kind of loan. If you are at least 62 years old and you still have equities left, then you are totally qualified for reverse mortgage. Three seniors can be co-borrowers for this loan but all must meet the requirements. You will not be asked by the lender to produce income history or credit scores. As long as you have equity, your home will be the sole guarantee that secures the loan.
The Required Insurance
When you take out a reverse mortgage, you will be required to get mandatory mortgage insurance. It is a guarantee for the lender ensuring that he could get his capital and costs back. The insurance also guarantees that you will never owe more than the value of the property. In case the resale price of the home can not cover the capital and costs invested by the lender, the difference will be taken from the mandatory insurance.
Reverse Mortgage Can Be Used to Pay Conventional Mortgage
This type of loan can pay away conventional mortgage, if there is still something left that needs to be paid. You can take out a reverse mortgage so that the cash you get monthly can be used to pay the original mortgage. This is a way to can increase your equity. This will greatly benefit you and could unburden you from financial problems. The good news is that a reverse mortgage loan does not have to be repaid monthly.
The Fees and the Required Counseling
There are fees that you have to pay when you take out a reverse mortgage loan. First, you have to pay the compulsory insurance which is normally 2 percent of the appraised value of the property. There are also origination fee, titling, title insurance, recording, and attorney’s fees. You also have to pay the real estate appraisal and the monthly servicing fee.
Aside from the fees that you have to pay, you will be required to go through mandatory federal counseling. This is stipulated in the law and you have to comply with it. Counseling is very useful for the borrower to totally understand the loan. You will get expert recommendations from the counselor who is not employed by the lender.
Reverse mortgage loan can greatly help senior citizens. Because of this, it is fast becoming the most popular loan option for the elderly. You have to seriously consider this option to determine if you can get good value from it.
Rob K. Blake, refinance expert and author, educates mortgage shoppers on finding local providers by state like Hawaii Mortgage Brokers and Lenders and provides reviews of national companies like Asset Acceptance Capital Corp.
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