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Reverse Mortgage Loans

Understanding the Mortgage

 Before we discuss our topic, it is quite essential for us to first understand what is the exact meaning of ?mortgage?. Mortgage is an act by means of which a person, who intends to take any loan from a lending institution like bank etc, deposits his property like land, home i.e. immovable property with the lender with an agreement that in case the borrower does not repay the money, the lender has the right to sell the property in order to realize his money lent. There are proper agreements to this that are of course signed by the borrower as well as the lender so that the sale in future can easily be affected.

The rights over the property are also transferred into the favor of the lender. This act is known as the mortgage. It is very important to note here that in the present times, the mortgage loans are of course the most important types of loans as these are the loans that are provided at the lowest rate of interest in its category. I think the reader must have understood the meaning of the word ?mortgage? and now we can proceed further.

Understanding Reverse Mortgage

After having understood the meaning of the word mortgage, now we can easily discuss the term reverse mortgage. The reverse mortgage is basically a special type of home loan that allows the borrower, the owner of the home, to convert the portion of the equity in home into the cash. It is very important to note here that the equity is built when a person make the repayments towards the mortgage over the years. Also, there is no repayment that is required to be made unless the borrower does not use his home for the living purpose. These loans are mostly insured loans, which are insured by the various government agencies. For example, in the United States, where the reverse mortgage loans are becoming very popular, the U.S Department of Housing and Urban Development takes care of all such loans here. Now the question arises is that who can take the loan and what are the other related aspects of the reverse mortgage loans that have to be taken care of by a person. Let us discuss all this in our next part of discussion.


Eligibility and other related aspects

As far as the eligibility criteria are concerned, these differ from one country to another and thus, there are no general criteria that can be discussed here. So, let us discuss it with reference to the United States in order to understand it. If a person living in the U.S wishes to take the mortgage loan, he has to complete the requirements of the U.S. Department of Housing and Urban Development?s Federal Housing Administration. It requires a person to be at least 62 years of age who is the owner of the home outright or who has a low mortgage balance which can be easily paid off by means of the reverse mortgage loan. The principal criteria in such circumstances are that a person should be living in the home. Apart from this, the person is also required to take the required information from the government approved counseling sources. There are of course approved lenders from which a person can easily take the reverse mortgage loan. Let us now see, what are the different types of homes, which can be used to take the reverse mortgage loans. As far as U.S is concerned, the home of the person who wishes to take the reverse mortgage loan must be a single dwelling or a two to four unit property that is under the possession of a person and he occupies it too. Also, the townhouses, units in condominiums and the detached homes are eligible.

Even some of the manufactured homes are also eligible. In case of condominiums, it is essential that they be approved from the related government department. Now the question that haunts the mind of reader is that what is the difference between the reverse mortgage and the bank home loan. It is important to note here that in the case of bank home loan, a person must have the sufficient income to qualify for the loan so that he can easily make the monthly installments towards the repayment of the home loan. But in the case of reverse mortgage loan, a person gets payment from it and is not dependant upon the income of the person. Of course the amount that a person can borrow under the reverse mortgage depends upon the age, interest rate and the appraised value of the home of a person. It is common trend that a person can easily get more amount under the reverse mortgage loans if he is quite older, has a more valuable home and the interest rates are low. The most important aspect of the reverse mortgage loan is that a person is not required to repay the loan until he is living in the home and using it as a principal residence. But, being a homeowner, a person is of course required to pay the different types of taxes related to his home and the other such charges. Since the person can never take the more amount than his home?s value, the lender never takes his home away from him. When a person wishes to sell his home or it is being used for other purposes, he is required to repay the lender the original amount taken plus the interest and other fee to the lender. If there is still any equity left in his house, it can easily be given to the heirs of the person. Thus, it can be rightly said that the reverse mortgage loan is totally different from other types of loans and it pays to a person instead of a person paying for it.

So,go for the reverse mortgage loan now

If you require money and you are quite older in age and using your home as a principal residence, you can easily go for the reverse mortgage loan. There are many lenders that are approved by the government to provide this type of loan to a person to fulfill his financial requirements. There is no fear of repayments as in the other types of mortgage loans. So, get the reverse mortgage loan now and relax.