A reverse mortgage can help a senior citizen who needs money. A reverse mortgage is a loan against the owner’s equity, or the quantity of the home’s value the person owns free of any additional liens. The lender pays the homeowner a specific sum every month out of the total of their loan. The borrower has to be at least 62 years old, and does not pay back the loan until the close of the mortgage.
A reverse mortgage is due in full when the borrower dies, sells the property or no longer can dwell in the home. All or part of the house’s equity is tied up by the reverse mortgage. A borrower that needs to sell his home due to financial problems, such as medical bills from a serious illness, may not get any cash from the sale of the home on account of the reverse mortgage. The heirs of a deceased debtor may wind up in precisely the same situation, and have no way to get money from the sale of the home to cover the expenses of the estate.
Reverse mortgages aren’t always fixed-rate loans, according to the Federal Trade Commission. Fixed-rate mortgages have a fixed interest rate for the life span of their loan. Some reverse mortgages are adjustable-rate loans, so the rate of interest can increase sharply, causing the balance of their mortgage to go up. The amount billed per month for interest accrues and is added to the equilibrium in both types of mortgage loans.
Some service providers may indicate a reverse mortgage to a older homeowner as a way of paying for needed repairs, like a brand new roof. Some reverse mortgage creditors may pressure a senior citizen about extra financial products, according to the Federal Trade Commission. A senior citizen should not sign anything he does not understand; no extra bank products are required to get a homeowner to get a reverse mortgage.
A reverse mortgage requires that the homeowner keep the property taxes and homeowner’s insurance present. The home needs to be maintained and in good condition, with no outstanding significant repairs. A homeowner that fails to meet these criteria can be faced with having to repay the whole loan early. A senior who’s facing financial difficulty may not be able to keep up with the debtor obligations and may lose the home in foreclosure for nonpayment of their reverse mortgage.