Why is a Reverse Mortgage a Good Idea?
Are you wondering if a reverse mortgage is a good option for you? They are for some people and they are not for others, it depends on many factors.
Reverse mortgages became popular in the 1960′s as a way for cash strapped seniors who wanted to continue to live in their own homes. They are something to consider if you are a senior who would like a little extra monthly income. If you are interested in setting up a line of credit or a lump sum payment as part or whole of your reverse mortgage, you may do which ever works best for you.
The thought of a monthly income sounds good but when do I repay the money?
You will not have to make monthly payments back to the lender unless you move or sell the house. When you die you family will be responsible for your debt taken from the mortgage and will have to make monthly payments or sell the house to pay off the loan. Interest and fees will also be due at this time.
What if the housing market continues to go down, can I owe more than my home is worth?
You have the option of getting income from your reverse mortgage for the length of time you live in the house. If the balance of the loan at anytime becomes more than the amount the home is worth you will still get the same monthly payments your originally set up. It does not matter how many payments you get over time or how high the interest rate gets. You will never owe more than the home is worth.
What are some eligibility requirements of a reverse mortgage?
It is very easy to qualify for these loans especially since income qualifications and credit scores are not part of the process. The amount you can borrow is based on interest rates, your age and the value of your house at the time you are taking out the loan. Upfront costs are high usually about $12,000 dollars but you will not actually owe the money until you move or die.
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