How do Reverse Mortgages Work?
For many seniors it’s important to understand how do reverse mortgage work.
Reverse Mortgages are available to homeowners that are at least 62 years of age and the home they are refinancing must be their primary residence. Reverse mortgage is a loan against that home that does not need to be repaid. You are required however to pay taxes and homeowners insurance. You may access the equity in your home and receive a lump sum, monthly “tenure” payment, credit line, or a combination of these programs.
The major benefit of a reverse mortgage is there is no credit check or income verification. This loan is intended to supplement your income and provide additional funds for you as a senior to enjoy life and keep all bills paid up to date. Your home however must have at least forty percent equity in the home in order to quality at the age of 62. You must live there as your primary residence for at least six months and one day out of the year.
Reverse mortgages can open the gate for a more enjoyable future. With the equity of your home, you can turn into liquid cash. You are now able to pay for the medical attention you need, travel the world, or just simply keep up on your monthly expenses.
You always have the option to pay the loan back if that is something you want or need to do, but it is not required. The loan is not required to be paid back until the homeowners who entered the reverse mortgage program have become deceased. Whoever is going to be purchasing the home or refinancing will only have to repay the balance or the value of the home whichever is lesser.
Just like any other loan you may obtain in life there will likely be expenses. The reverse mortgage program does have fees such as appraisal, title, lender fees, etc. Most all fees can be paid through the proceeds of the loan. The only fee you may encounter to be paid up front is the appraisal fee. It is wise that you ask the lender to pay this for you as well, and you may repay through the loan proceeds.