Purchasing a Home With Reverse Mortgage

This type of mortgage is available to seniors. This is used to free the home equity of the estate as either one lump sum payment or multiple payments. The property owner can have his property as collateral for a loan, which he does not have to pay with the agreement that he should not leave the property. The mortgage is deferred when the property owner dies, leaves the house to go to a home care facility and when he sells the property.

Using reverse mortgage to purchase a new estate

Most home owners who qualify for a reverse mortgage think that this type of mortgage is for refinancing purposes only. However, they can use this to purchase a new home. They can make it happen by acquiring a lump sum payment that is equivalent to the remaining balance of forward mortgage. If they have the available cash to purchase a house, they can pay the property in full. Then they can use the reverse mortgage to help them cover the expenses they incurred when they purchase the property in cash.

How to qualify for a reverse loan mortgage

As mentioned earlier, this type of loan is available to seniors only. He should be at least 62 years old. He should also own the property. If the house has still some loan balance, it should be low enough to be paid off during the settlement. He has to live in that property as well. It is also required that he gets consumer information. This has to be given by an approved counselor from the HECM before granting the loan. He can easily find approved HUD counseling agencies online. The counseling agents usually give free services or charge very low.

Not all homes are qualified for this type of mortgage. It has to be a single family home. Those condominiums that are HUD approved or manufactured may also qualify. The amount one can get from the reverse mortgage varies. This will greatly depend on age. The amount will also depend on the current interest rate as well as the value appraised for the house.

Receiving the payments may vary as well. You can have it in tenure. You can receive monthly payments. However, you have to see to it that at least one of the borrowers lives and that he continues to live in that house. You can also choose to receive it through terms. This means that you receive payment at specified period of months. You can also have it through line of credit. This has no pre-determined time. You can have the amounts you desired at the time you want it until the credit is exhausted. You can also have it through modified tenure. This gives you monthly payment with the combination of line of credit as long as you remain to live in that property. Finally, you can have a modified term. This is similar with the modified tenure but with a fix period.

Reverse mortgage can greatly help seniors who are property rich but do not have the enough cash to spend. Through this, they can live more comfortably and improve their way of life.

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