Reverse mortgage is designed mainly for the senior people of the country. There are different types of reverse mortgage each having different features. There are various aspects of reverse mortgage, which need to be known by the borrowers of reverse mortgage. These may be known under the topic Reverse mortgage FAQ. The questions dealt with below are the Most Frequently Asked Questions”.
Reverse Mortgage FAQ(Frequently Asked Questions):
What is a Reverse Mortgage?
Reverse mortgage may be defined as a type of mortgage, which does not require a monthly payment and allows a borrower to reside in the premises till the house is disposed off.
What is the difference between reverse mortgage loans and other types of conventional loans?
In case of other types of loans, the monthly income of the borrower is taken into account to ascertain whether he is in a position to repay the loan. On the contrary, in case of a reverse mortgage loan type, no monthly payment is required to be made and hence it does not take into consideration the monthly income of the individual.
There is another difference. In case of the traditional loans, in the event an individual does not make payments (monthly), the borrower may have to forgo his home. In case of reverse mortgage loan, no monthly payments are required to be made and hence fear of losing ones home does not arise.
What are the eligibility conditions of availing a reverse mortgage loan?
A borrower opting for a reverse mortgage loan ought to be 62 years and above and should be residing in the premises for quite some time (6 months) or more prior to applying for the reverse mortgage loan.
Why is it called “reverse” mortgage?
It is called “reverse” because in this type of mortgage, debt is used to convert equity into ones income. In case of a forward mortgage, debt is used to convert income into equity.
How many types of reverse mortgage loan types are known?
In general, three types of reverse mortgage loans are known. They are as follows:
-HECM or House Equity Conversion Mortgage
-Single Purpose Reverse Mortgage
-Proprietary Reverse Mortgage
How much money can be availed as reverse mortgage loan?
Generally, the amount disbursed as loan amount in reverse mortgage differs from one loan program to another. One may avail $30,000 or more than amount. Usually, reverse mortgage program- Home Equity Conversion Mortgage or HECM disburses the maximum loan amount. Factors, like age, interest rate, locations of home are some of the aspects taken into consideration.