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All About Reverse Mortgage For Seniors
A reverse mortgage can be understood of as a kind of home equity loan for older homeowners which also does not require mortgage payments every month. The loan is repaid when the borrower moves out or happens to die. Reverse mortgage for seniors acts as a good retirement plan nowadays and is also considered to be one last source of income. The very first reverse mortgage which was federally insured (also called as equity conversion mortgage or HECM) was introduced in 1989. These loans can be taken up by people who fall above the age of 62 who can use the reverse mortgage for retirement purposes by tapping a portion of their home equity without the necessity of having to move out.
Reverse mortgage for senior citizens is particularly beneficial because of the facts that they wouldn’t have to move out, will be able to afford the cost of maintaining their house and can also access the equity of their house in order to supplement the income or save the money obtained for a time in the future. This reverse mortgage can also be used by people to eliminate the existing mortgage and increase the existing cash flow of each month.
However, the senior citizens who would want to opt for a reverse mortgage should understand the other side of the coin too before making a final decision. While it does have its pros, the closing costs and the fees involved in the process could sometimes be higher than expected; it is absolutely important that the borrower maintain the house and pay all the property taxes along with the home-owners insurance. The sentiments of passing the house along in the family may not be fulfilled if the aspect of reverse mortgage enters the picture. The reverse mortgage loan amount is affected by various factors such as age (in case of couples, the age of youngest spouse is taken into consideration), the value of the house, interest rate and lesser of the appraised value of the federal housing administration’s HECM mortgage limit of $636,150.
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