If you’re interested in a Reverse Mortgage, there are a few pieces of information you should know to make sure you make the right decisions and take the right steps to put yourself in the best position possible. Unfortunately, there is a significant amount of inaccurate or misleading information circulating due to the recent boom in popularity of reverse mortgages. The downturn in the economy led to a storm of people looking for a way to make use of the equity they’ve built up in the homes over a period of several years. As with any trend, many lenders were ready and waiting to take advantage of those individuals not fully aware of what a reverse mortgage was or what it entailed. To help you avoid that pitfall, let’s go through some of the facts about reverse mortgages.
Reverse Mortgage Facts
You might be asking yourself why a reverse mortgage has become such a popular phenomenon among modern homeowners. The main reason is that it allows you to tap into your untouched equity as collateral for a loan with much lower interest than you are likely to find through other means. Another great thing about the reverse mortgage system is its incredibly lenient qualification requirements. In fact, there are almost no credit or income requirements at all. If the homeowner is at least 62 years of age, you’re already good to go in the process. The only other big requirement is that the homeowner must own the home outright. At this point you might be saying to yourself that it sounds too good to be true, or that there must be some catch that will hurt your loved ones who will inherit your estate. That is absolutely wrong.
The federal government has made it a point to protect the loved ones of reverse mortgage owners in order to ensure that there is confidence in the system that the inheritors of the estate won’t be overburdened by debt once the estate is passed on. In fact, upon the passing away of the homeowner, you won’t even be required to pay off the balance immediately. Instead, you have the option of selling the home at that point, leaving you worry-free with regards to immediate repayment of capital. The other major concern with the reverse mortgage process is the question of, “What if the loan grows to exceed the equity I have in my home?” The answer leads us right back to the federal government and specifically the FHA, or Federal Housing Administration. Again, in an attempt to promote the reverse mortgage system, the FHA will protect you from lenders looking to collect on their loan by forcing the lender to request reimbursement from the FHA directly if they decide not to sell the home to cover their costs.
The best part about Reverse Mortgages
