Should You Go About Planning Your Estate With The Help Of Reverse Mortgages?
For most of the seniors, their home is the biggest single asset and this fact has never changed since the housing bubble or the sluggish real estate market. Unlike the young consumers, the seniors are blessed with the opportunity to take out reverse mortgages and use the proceeds while planning their estate.
An increasingly large number of seniors are often in need of immediate cash in order to repay their credit card debt or renovate their house and they’re the ones who try tapping their home equity so that they don’t have to take resort to the professional debt relief options. You need to calculate the amount of loan that you want to borrow through a home mortgage calculator and take out the exact amount. If you’re someone who doesn’t know much about the reverse mortgage loan, here are some important points about it.
What is a reverse mortgage loan?
A reverse mortgage loan is a special type of home loan that has got similarities with a home equity loan. Despite having similarities with a home equity loan, there are some distinct differences too. The equity that you’ve built over years can be accessed by a senior by taking out a reverse mortgage loan. The borrower doesn’t have to repay the reverse mortgage unless he sells off his home, changes the home from principal residence to secondary residence or expires.
What are the qualification criteria for a reverse mortgage loan?
When you’re wondering about estate planning with reverse mortgage, you should know the qualification criteria for getting such loans. If you want to be eligible for an FHA or an HECM, you should be a homeowner of 62 years of age; you should own your home and also have a low mortgage balance that can be repaid at closing with the funds of the reverse mortgage loan.
Are all real estate properties eligible for a reverse mortgage loan?
If you want to be eligible for the FHA or the HECM, your home needs to be a 2-4 unit home and 1 unit should be occupied by the borrower. The manufactured homes or the HUD-approved condominiums that already meet the requirements of FHA will also be eligible for the loan.
What is the difference between a home equity loan and reverse mortgage loan?
In case you take out a home equity loan or a home equity line of credit, you need to demonstrate a good income level so that the lender may believe that you’ll be able to make payments on the loan with the interest rates. In case of a reverse mortgage loan, things are different as you’ll be paid by the lenders and you don’t need to make the monthly payments on the loan.
Now that you know the details of a reverse mortgage loan, you should be able to plan your estate with the proceeds of such a loan. Use a home mortgage calculator to determine the exact amount that you may need to meet your expenses.