A reverse mortgage is a type of asset loan based on their home equity. They focus on seniors aged 62 and older, where they are not required to pay monthly mortgages. Instead, the loan is repaid after the borrower dies or moves out from his or her home. It’s actually the last source of income for the elderly, but makes them comfortable when retiring. Such privilege was first introduced in 1989, where it gets a portion of their home equity, without the need for relocation to another place. The seniors will just need to acquire a simple reverse mortgage quote, wait for approval, and enjoy his or her remaining years.
Why this is Beneficial?
Boston College research economist, Steven Sass says this type of mortgage makes sense for those who have no plans of moving out, can afford the cost of maintaining their home, want a supplement for their income to have money for the rainy days.
According to National Reverse Mortgage Lenders Association CEO, Peter Bell, there are even those who resort to simple reverse mortgage quote so they can improve their monthly income.
“Incentives are provided to the elders making them acquire a reverse mortgage,” Bell said. “In some cases, they have the need to pay off a debt, an unexpected expense like healthcare conditions, or probably home repairs.”
Borrowers receive payments from the bank throughout their lifetime. The payments are actually based on the percentage of the gathered home equity. Until they die, sell the home, or permanently move out, they don’t need to repay the loan. The borrower must also have good credit standing upon availing the loan.
How Much Can You Get?
The elder can seek for a simple reverse mortgage quote to know how much he or she can get from the loan. The money borrowed must never exceed the value of the house. And if the balance is lesser than the home value by the time they die, their heirs keep the difference.
There are many factors which can affect the funds you are eligible to receive from a reverse mortgage.
An elderly is eligible to receive the reverse mortgage if he owns the house outright or is paying low mortgage balance before it closes. The claimed house must be their primary residence. A federal ruling that took effect in October 2017 says that the older a senior is with a valuable home, the more money they can get. The mode of payment will vary on the mortgage type – whether lump sum, fixed monthly payment, a credit line or some combination.