5 Tips about Reverse Mortgage: Life after retirement is bliss!
Having a career in the mortgage business, I have been trained to be disciplined and over the years, that changed into a hard and fast habit for me. Maybe that is a reason why I have always appreciated making future plans in time.
No! I am not going to bore you with my story. What I want to tell is about reverse mortgage plan that has offered me a wonderful life, now that I am 65.
What is reverse mortgage?
A reverse mortgage is actually a type of mortgage that allows a person to borrow money against his or her own home’s value. But for being eligible, you should be above 60 as this facility is exclusively for senior citizens.
There is no repayment of that mortgage until that property is sold or the borrower passes away.
What is the purpose of this loan?
The purpose of this loan is to ease the lives of those homeowners aged 60 or more who are retired and have limited income. With a reverse mortgage, they can make use of the accumulated wealth present in their homes for covering the basic expenses on a monthly basis including medical care.
Interestingly, the term ‘reverse’ is used because unlike traditional mortgage plans where the borrower has to make monthly payments to the lender, in this particular plan, lenders make monthly payments to the borrower. That’s the idea!
5 Tips about Reverse Mortgage:
Are you willing to applying for this loan? Before you proceed, let me tell you, it is essential to consider certain points. Check out the 5 tips:
1. Basics of this mortgage loan:
First, know a few basic things.
a. How much you can borrow depends largely on how old you are, i.e. your age, your property value and interest rates.
b. Of what is the maximum amount at closing, you won’t be allowed to take more than 60% of that. However, the exception is when you use loan proceeds for covering the ‘mandatory obligations’.
c. Interest rates in this loan category are of two types – adjustable and fixed.
2. 3 opportunities of this loan:
There are three main types of loans available –
a. HECM or Home Equity Conversion Mortgage
b. Financial Freedom Cash Account
c. Fannie Mae Home Keeper Loan
3. Understand the fees and costs included:
The fees that are included in this mortgage plan are a title search, appraisal, inspection, HECM program charges, mortgage insurance premium at closing (0.5% and 2.5% if drawn above 60%), annual mortgage insurance premium (1.25%), etc. Interest rate matters although you don’t have to pay any till you are living in your home.
4. Maintaining your home:
Are you sure that you can maintain your home? If you are confident, only then should you proceed with considering reverse mortgage loans; otherwise not. While with this plan, it is vital that you must do a good repairing of your property and be updated with property taxes and homeowners insurance.
5. Consulting a counselor:
It is always better to attend a reverse mortgage counselor who would help you gather a proper understanding of the whole plan, what its requirements are. Also, there would be a direct interaction with an expert, so you can get all your queries cleared.
“Let your life reinvent itself after 60”
You can get more detailed and elaborative understanding on a reverse mortgage with Reverse Mortgage Zone at the USA.