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Facts To Secure The Best Reverse Mortgage Loan

Facts To Secure The Best Reverse Mortgage Loan Equity Loans

A reverse mortgage, is the inverse of a traditional mortgage, as a lender pays homeowners instead of homeowners making payment to the lenders. Homeowners above the age of 62 are eligible for reverse mortgages, provided they own the home they reside in and have no or a minimal remaining mortgage balance. The financial institutions offer a variety of reverse mortgages, and picking the best reverse mortgage loan depends on homeowners getting the best value for their homes.

Here are some facts that can help understand reverse mortgages:

  • The total amount of debt incurred by a homeowner is known as debt limit and is inclusive of the loan amount, the financing fee, and the interest payables. This total amount is based on the equity of the home and is limited to the amount that a home is worth. In instances where the debt limit is lower than the home’s value, the homeowner would be paid a surplus at the time of full repayment.
  • While one of the general eligibility criteria for reverse mortgage loans is for the borrower to be the homeowner, there are exceptions to this criterion in some special instances.
  • A reverse mortgage lender charges a financing fee based on the home equity and the total cost incurred for financing the loan requested. A homeowner would be able to wrap this cost into the balance of the loan.
  • Generally, a reverse mortgage is payable when the time frame of the loan has expired, and liability of these payments is on the borrower or passed onto their successors once the expiration date is reached. In these instances, one can either sell the house to repay the loan or repay through any other available fund channels if they do not want to surrender the house.
  • A reverse mortgage loan can be canceled only within three days of borrowing by contacting the lender and reversing the loan process.
  • The loan amount paid to the borrower can be a lump-sum payment, a short-term recurring loan, or a long-term recurring loan, based on the borrower’s preference.
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