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A special type of home loan, a reverse mortgage, can help in converting a portion of the equity in one’s home into cash. The amount that is built up over the period of time can be paid back to the homeowner. This is somewhat different from a conventional home equity loan or a so-called second mortgage as here the debtor need not pay back to the lender if the loan taker no longer uses the home as their primary residence and also when they fail to meet the mandatory requirements that are particular for the mortgage. Also, the reverse mortgage loan can be used for buying a primary home by the loan taker if they are able to use the cash and pay the difference between the advance and sales price, plus the closing cost for the property that is being bought. The process involved in applying for such loans Any homeowner who is above 62 years of age can apply for one such loan type. The maximum amount available as loan is judged by the home value or a district cap that is set by the FHA. The cap nears the local medium home prices. Also, the age of the person applying for the loan is another factor that decides the loan amount. The older the person, larger is the loan amount they can get approval for. The rate of interest that is applicable when taking the loan is also a deciding factor which signifies that higher the rate the lesser is the amount which a homeowner can borrow. The loan amount is paid back in instances like when the homeowner does not use the home as their primary residence for consecutively a period of one year, also when the home is old or the homeowner passes away. The home is sold to make the payment for the loan. This is a non-recourse type of loan; it signifies that neither the homeowner nor the successors are responsible for any part of the loan that cannot be repaid from equity in that property. Some facts about reverse mortgages Reverse mortgages facts are some things, which are particular to this loan type. This can be taken as a chunk sum, monthly payments or as line of credit and sometimes even as a combination of these alternatives. The first is based on either adjustable or fixed rate of interest, while the other two are judged by adjustable rates. The loan is not repaid until the borrower lives in the home and there are no penalties of any kind charged on repayments. The borrower can use this loan to pay for the existing mortgages in this case he/she enjoys a lowered expense. When lien-free, the income goes up. In both the situations, the person ends up having increased flexibility in his monthly budget. Reverse mortgage rates are based on the value of the home at the time of approval of the loan. When the home prices go down, the person can cling onto any of three alternatives like lump sum, line of credit or monthly payments. In case the value of the home goes up, the borrower as well as his/her successors are benefitted from the equity that may remain in home even after the loan amount has been repaid. Loan limits for a reverse mortgage loan The amount that is offered as loan to a person is generally decided based on four factors, these are: - Age (where older is better)
- The present rate of interest
- The evaluated value of the home
- The government compulsory lending laws and limits
Any person can easily use the online calculator for knowing the estimate for the amount that can be taken as loan.
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Reverse Mortgage Facts, Reverse Mortgage Rates, Reverse Mortgage Loan,
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