What Is A Reverse Mortgage

Many new retirees find that they have not saved enough money to live out the rest of their life without working. If you are in a similar situation, there are a few senior finance options you have that most people do not. It is important now more than ever, with the uncertainty in Medicare and Social Security for senior citizens to properly for their retirement, but if they come to find out that they are short on cash, they can borrow on their home's equity. Many seniors do not understand how a reverse mortgage or lifetime mortgage work, this article's goal is to help you gain a better understanding of what it is.

If you are interested in applying for a reverse mortgage, there are a few qualification that you must meet. In America, a reverse mortgage is available to those who are 60 to 65, depending on where it is from. If your reverse mortgage has two borrowers, the younger of the two must meet the minimum age requirement. Another requirement is that you actually own your house, or that the amount that you owe on your house is less than the amount the reverse mortgage will be for. If you meet these qualifications, and you are in need of money, you next need to gain an understanding of the costs of acquiring a reverse mortgage as well as how much money you can actually borrow. Read and learn about pros cons to reverse mortgage.

A reverse mortgage allows you to capitalize on the equity that your house has built up over time. When determining how large your reverse mortgage will be, you should know there are some constrictions. The size of a reverse mortgage cannot exceed 50% of the value of your home, and there is also a floor and a ceiling and the size, usually the floor is $10,000 and the ceiling is $425,000.

There are several factors that contribute to the payment you will receive. The higher your age is, the higher your payment will be. This does not apply if you are getting your reverse mortgage in a lump sum. Another factor that will change what size payment you get is the value of your property and the location it is in. The bank looks at the value because it determines how large your reverse mortgage will be, and the location to determine if it is a good investment. The payment that you will receive will also be affected by market interest rates. Find out what are the cons of reverse mortgage, for more information.

Because a reverse mortgage is a  type of loan, it needs to be repaid. You can pay off the loan before it comes due, but that will usually cost you money in penalties. The loan becomes due when you sell your house or die, you can pay it off with the proceeds or allow the bank to own your house.