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Reverse Mortgage: Is It For You?
by: IMB
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Senior homeowners can get a loan through the reverse mortgage scheme? What is reverse mortgage and how does it work? Reverse mortgage is designed for senior homeowners who wish to avail of a loan, either as lump sum or instalment basis. The choice depends on the homeowner who wishes to avail of the scheme. Reverse mortgage is also called the lifetime mortgage.
With reverse mortgage, the money that can be mortgaged is from home equity. Any outstanding mortgage balance or any other debt that has yet to be paid in terms of the home is deducted. As the mortgage is paid, the value of home equity is increased. To get home equity value, deduct any outstanding mortgage balance and house debts from the actual market value of the property.
What makes reverse mortgage interesting enough is the mode of payment. The mortgagor or the homeowner doesn’t have to pay until he dies, leaves the house, or sells the house. Unlike other type of mortgages, with reverse mortgage, the mortgagor is not obliged to pay on a monthly basis. The interest just adds up to the lien on the property.
With reverse mortgage, the mortgagor or homeowner can choose either to get the money one time or lump sum, monthly instalment or a combination of both. The homeowner can decide to take a portion of the loan as lump sum and the remaining portion on instalment basis.
Who Can Avail Of Reverse Mortgage?
The mortgagor must be 62 years or older and a homeowner. There is no required amount of income so basically any senior homeowner is qualified to apply for reverse mortgage. However, it doesn’t mean that all applications will be approved.
Mortgage lenders may also look at the credit background of the mortgagor. If there are any pending debts, the reverse mortgage application may not be approved easily. Approval of a reverse mortgage is dependent on several standards that mortgage lenders use to gauge whether the applicant is worth the loan.
Paying Reverse Mortgage
Reverse mortgage payment is deferred until the homeowner dies, decides to leave the house or sell the house. The payment for the mortgage will be taken from the money that will be generated in selling the house. If the house is sold less than the amount loaned, the difference is waived. However, if the house is sold more than the cost of the amount loaned, the homeowner (if still living) or the heirs (if the homeowner has died) will be given the difference.
About the Author
This article is from Irish Mortgage Brokers, a mortgage and finance company that provide services and information about mortgages, interest rates, first time buyers, refinancing, property investment and more. Finances and investments taken cared of at http://www.mortgagebrokers.ie