A reverse mortgage is a new way to meet needs after retirement if you do not have sufficient savings. A reverse mortgage is basically a home equity loan. This loan can be taken only by the homeowners who are old and do not require any mortgage payments monthly. The loan gets repaid once the owner of the house who is the borrower either moves out of the house or dies.
Who should take a reverse mortgage loan?
The reverse mortgage loan can be used to finance one’s needs if the borrower:
- does not plan to leave his property
- can still afford to pay to maintain his property
- is ready to access the home equity to get an additional income
There are some who take a reverse mortgage loan in order to pay off any existing mortgage that they may have and improve their monthly flow of income. There are others who need to pay off some other debt or they need money for an unexpected expense. The bank makes payments to the homeowner all through his life. The payment is calculated based on the accumulated value of the home equity. The balance loan amount does not have to be paid to the owner of the house who is the borrower of the reverse mortgage policy either moves out of the house or dies.
Know about reverse mortgage
A few basic points about reverse mortgage check this out, can help you be clear on what this mortgage is all about and how it works.
- The bank will keep making payments to the borrower based on the percentage of the home equity that has been accumulated
- It needs to be repaid when the borrower either dies, sells off his property or moves out of the property
- Those who are over 62 years of age are eligible for the reverse mortgage policy. However, they need to have their own home to avail this benefit
- The money can be used for anything like to supplement the monthly income or to pay for any health-related expenses
A reverse mortgage is one of the last income resorts for many but off late this has become one of the tools through which homeowners have planned for their retirement. The first time this was offered was in the year 1989 where the mortgage system let the older people, who are older than 62 years to tap into a portion of the equity of their home, without they have to leave their house.