Reverse mortgage loans are loans that are made available to senior home-owning Americans aged 62 or above. The higher the age of the borrower, the greater is the amount of qualifying home equity that can be cashed by the home owner.
Most all of reverse mortgages are insured by the Housing and Urban Development Department (HUD) so they are safe. There are no credit score checks to qualify for reverse mortgage; the only requirement is that the senior needs to own a home with enough equity in it. There is a mandatory counseling that must be gone through before a reverse mortgage is taken.
Even after taking a reverse mortgage, the
senior home owner continues to maintain title to the home through the life of the loan. Reverse mortgage is subject to governmental controls and directions so the advantage is for the home-owning borrowers. The borrower doesn't owe more than the home's fair market value at any point of time.
The money obtained through reverse mortgage doesn't need to be repaid during the life time of the borrower and the borrower can continue to live in the same home with increased money inflow that can take the form of disposable income. Living conditions and lifestyle changes can be implemented with that money. Seniors can opt to travel and see the world or take a well earned vacation or break with the money from reverse mortgage. Or they could use it for meeting medical expenses and
nursing fees.
The reverse mortgage money becomes repayable to the lender only when the borrower passes away. Then the lender takes control of the property to recover the loan. The money can be repaid by the children of the borrower, in which case the property can be continued to be owned by the children.
The maximum amount that can be claimed as home equity for calculation of reverse mortgage has recently been increased to the tune of $625,500. This can give further impetus to the economy by allowing home owners to utilize their locked-up home equity and get a monthly income line to improve their lifestyles.
