Reverse Mortgage
Reverse mortgages are starting to get popular in the United States because of the reason that it could get money to people's pocket without needing to worry about upfront repayment. This is basically a type of loan that you can take based on the equity of your home. The fact that one can get this loan without any credit checks or strict income requirements make this type of mortgage very popular among people who need money at the soonest possible time.
The success stories in reverse loans, though, don't apply to every people. Some consider getting this type of loan as a very expensive option. But it's true; the entire process could become confusing and overwhelming. The best way to combat this is to get yourself well informed before obtaining a loan. You should know the pros and cons of getting a reverse home loan. Overall though, if you need a hefty sum of money and you have a high value home, reverse mortgage is for you. And here are reasons why getting a reverse loan could be good for you:
You can choose how to receive the proceeds of your loan
Probably one of the best asset of a reverse loan and why many people opt for it is the convenience on how you can receive your payment. You can either choose a lump sum mode of payment, fixed monthly payment or open a credit line where you can get your money anytime you need to. And what's great is that you have the liberty to change the mode of payment; you can receive a monthly payment and then change it later to opening a credit line or get your remaining money in a lump sum. Lenders also allow you to combine all of these three modes of payment.
No need to worry about taxes
Whatever sum you receive from your reverse loan is non-taxable since the government considers this as an advance loan and not an income. And upon the full payment of the mortgage, the interest rates that you have to pay are even tax-deductible. So it is more likely that your heirs will have additional benefit from the mortgage. This is a good thing because taxes could be really a burden especially if you are receiving a more than reasonable sum of money. You can fully enjoy the amount that you are getting, in this case.
Qualifying for the mortgage is easy
It is so easy to qualify for a reverse home mortgage. You just have to be at least 62 years of age along with your co-borrowers, if you have any. And yes, you must be living in the home where you will get the equity against. You just also have to make sure that the loan amount that will be granted to you is not lesser than any money or loan you previously owe.
Getting reverse mortgages is indeed a great option if you need money in immediacy but don't want to worry too much about repayments. So rather than struggle to make ends meet, you can just seek a reverse home mortgage.
Are you someone age 62 years or older and wants to find a mean to have additional sum to your income? You might have heard about getting loans or mortgages. But, have you heard about reverse mortgages? This is basically a type of mortgage where you can use the equity of your home in exchange for a loan – it could be in the form of a lump sum or a monthly payout. The good thing about this is that you don't have to move out. You actually never have to worry about paying for your mortgage as long as you still live in the house.
It might sound crazy but it's true. In fact, this is becoming more and more popular in the US for the convenience that it features. But, if there are those that are advocating for this type of mortgage, there are also those who are advising against it. In reality though, obtaining a loan on your home equity can be helpful but not everyone and not all situation is right for it. So here are things that you should know about reverse home mortgages:
Are you qualified to obtain a reverse home mortgage?
According to the FHA, the borrower must be at least 62 years old or older and a homeowner. You must be the outright owner of the home and must have low mortgage balance. You should be able to pay off your mortgage balance at closing with the proceeds of the loan. It is also required that you live in the home. Some financial institutions will also ask you to obtain consumer counseling from an HECM counselor.
Is your home eligible?
Financial institutions require that your home is a single family home type. It could also be a several-unit type of home providing one of the units is occupied by the individual who is obtaining the loan. If you are living in a condominium or manufactured homes, you can also be eligible for reverse loans but you have to meet the FHA requirements and your unit must be HUD-approved.
If I outlive my loan, can the lender take my home?
It is stated that in a reverse loan, you don't have to repay as long as you are living in the house. But you should maintain the taxes and insurance as well as the state of the property. So, as long as you live and stays in your house, there's no need to worry about lenders coming after your property.
How much can I borrow?
Depending on your age, the value of your home upon appraisal and the prevailing rates, you can get as much money as you need. The current mortgage limit set by the FHA is also another factor affecting the amount of money that can be released to you in your reverse loan. There are reverse loan calculators online that you can use to help you calculate the amount of money you can get. In general, though, you can get more money if you are older, if the interest rates are lower and if your home is more valuable.
These are just few of the things that you need to factor in when deciding whether to get reverse mortgages or not. Just a rule of thumb, avoid seeking paid services for reverse loan referral because the FHA does not recommend this. Besides, agents can take advantage of you and persuade you to get a loan though you don't really need it.
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