You Have To Bear The Responsibilities Of Your Home Even After Taking The Reverse Mortgage Loan
The homeowners who would like to take a reverse mortgage loan have to get free counseling done by a third party in most cases. This is to let them look at some alternative options.
Know the cost before applying for a reverse mortgage loan
If you have decided to take the reverse mortgage loan then you should know that you would end up paying higher than the average closing cost which is calculated based on the home value. This includes the mortgage insurance, fees etc. The interest rate would also be higher than any other traditional mortgages that you may have taken.
The reverse mortgage loan borrower is responsible to pay for the property taxes, repairs, and insurance in case you fail to do so then you would have to repay off your mortgage early.
Also when you spend the home equity then this means that your home value also depreciates. This leaves lesser amount to pass down to your family.
It is advised that you look at the other income sources like through automated trading robot before you go for a reverse mortgage loan. You should first think about liquidating your own portfolio and also cutting down on your expenses. If you are still not able to make ends meet then go for a reverse mortgage loan.
What are the responsibilities and the requirements of the borrower?
- The borrower who takes the reverse mortgage loan should be more than 62 years of One of the spouses could be less than 62 years of age but then the loan officer will ask for some additional information to confirm if you are eligible for the loan
- Any existing mortgage then you have should be paid off with the proceeds of the reverse mortgage loan. This should be the primary lien.
- The property that is used in the form of collateral for the loan should be your primary residence. The vacation homes do not qualify for a reverse
- The borrower has to bear the responsibility to pay off the real estate taxes, homeowner insurance and other obligations that are mandatory
- The borrower has to ensure that the condition of the property is maintained and any repairs are taken care of
- In the case of the death of the borrower the estate or the heir of the borrower should pay off the mortgage balance
Types of reverse mortgage loan
The reverse mortgage is basically classified into two types. These are the HECM or home equity conversion mortgage and the property reverse mortgage