Facts About Reverse Mortgages
It is through reverse mortgage that people that are 62 yrs. old and above can convert the equity of their house into cash. Understanding reverse mortgage and its ramifications are very important before an individual decides to get one. It is in this article that we will be discussing the things that are related to reverse mortgage.
The interest and the principal amount is what you are going to pay in a normal house loan. The equity of your house will go up while the amount that you have loaned will also go down. Everything is opposite when it comes to reverse mortgage. It is in a reverse mortgage that you can turn the equity of your house into cash. You will not be required to pay the monthly payments. The cash that you need can be paid in different ways. You can have your cash in a single lump sum payment. You can also get your cash on a regular monthly payment. If you wish, you can also place the cash on a credit line account.
It is in reverse mortgage that the homeowner still owns the house and gets the cash that they wish to have. The system in a reverse mortgage is that the equity of the house will go down while the loan amount will go up. The total equity of the house should be as the same value and not higher with the cash loaned in a reverse mortgage. The value of the house should be the same value that the lender must seek. Your other assets including the assets of your house are protected by what is called as a non-recourse limit.
It is still required to pay the principal amount and the interest. If the owner of the property dies, sells the house, or moved to a new home, then he has to pay the loan. The loan amount will not have to be paid, if none of these instances occurred.
The lender will have to pay their loan if these circumstances also happen. The property tax that wasn’t paid can be a factor for the lender to pay their loan. The loan should be paid if the lender fails to repair and maintain their house. If the lender failed to ensure their house, then they will have to pay the loan. If there is a declaration of bankruptcy, then you will have to pay the loan too. The loaned amount also have to be paid if you abandoned the property. If there is fraud and misrepresentation, then you will be required to pay the loan.
A home equity loan is different from reverse mortgage. These can be methods to obtain money from your equity but they are totally different. These loans are the types of loans that will require you to pay the monthly interest on the total amount.
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