What Is A Reverse Mortgage?
A reverse mortgage is a type of loan whereby the homeowner gets back the money they have invested into their mortgage. In some cases, this can be a real boon for homeowners in their retirement years, especially since no repayments have to be made on the loan as long as the homeowner is alive and still living in the house affected by the reverse mortgage. In fact, most reverse mortgage programs are marketed directly at older homeowners; most stipulate that home owners must be at least 62 years of age and must most of the year in the home which will be affected by the reverse mortgage. The interest rates on a reverse mortgage keep growing, but there is not problem with this unless the borrower passes away or moves. At that time, the complete amount - with interest - is due, although the total amount cannot be greater than the value of the home. The money received for a reverse mortgage varies widely. It all depends on the age of the homeowner, the value of the home, the amount of loans (if any) on the property, and even the location of the property. Usually, those with paid-off mortgages living in valuable homes can expect the most cash from a reverse mortgage. A reverse mortgage allows the homeowner to continue to keep the home, which is a great boon to those who wish to keep their home but still have the money to continue to live comfortably in retirement. The homeowner, as the owner, still is responsible for any costs and repairs of the home, including taxes. In some cases, a reverse mortgage can be called in - that is, the lender could demand that the loan is due immediately - of the home is kept in poor repair or if taxes or other money is not paid on the property. Homeowners should also be aware that if their reverse mortgage pays them monthly, this may qualify as income for some taxation or program purposes, and may affect how much money they have from these other sources. Those interested in a reverse mortgage should get a copy of their credit report (to determine interest rates and to correct any mistakes before applying for a reverse mortgage) and should research reverse mortgages carefully. The National Center for Home Equity Conversion (NCHEC) may be a good organization to contact for those interested in a reverse mortgage. This non-profit agency has drafted a list of lenders and counselors that provide fair and complete information about reverse mortgages.
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