Reverse Mortgage 101
Reverse Mortgage mainly involves the lending of money to a senior citizen based in the United States. It is a type of loan that is readily available for individuals who are aged 62 years and above. It is a loan availed by these senior individuals who are usually homeowners with the twist that the interest to be paid with it is not included every month. The entire interest rate for the duration of the said mortgage or loan is instead added to the title of the land or house as a lien. This will serve as a form of security on the part of the creditor or lender if ever there comes a time or instance that the debtor or borrower cannot pay the outstanding amount due. This is normally included in the contract of mortgage signed by both of the contracting parties.
Besides the 62 years of age requirement, the debtor or borrower of the money must also not have any other mortgages at the time of the acquisition of this reverse mortgage. If there are any existing mortgages like home mortgages, residential mortgages, collateralized mortgages and other types of mortgages then the debtor will be denied this reverse mortgage. This is probably one of the strictest, if not the strictest amongst the numerous requirements of this type of mortgage today. The debtor or borrower is also required to undergo credit or loan counseling. A third party counseling firm or counselor will do this counseling. The borrower will learn everything that is needed with regard to reverse mortgage, arming him with the necessary knowledge in the process.
Payment method in this reverse mortgage comes in numerous forms. It can either be line of credit, lump sum or monthly payments. The first one refers to a credit source extended to an individual by a bank or any other financial firm. This method maximizes the availability of money. The second one refers to the acquisition of the entire amount due. This in turn provides the entire cash immediately, but normally has larger interest rates. The last one refers to the payment of the amortization due in a monthly basis. This is known as "tenure payment" or security payment wherein the borrower or debtor will receive the money during his or her entire lifetime as long as he or she is still alive.
The value of the property involved in reverse mortgage has no limit. However, the maximum appraised value for this kind of mortgage is set at $625,000. No matter how much the value of the lot or house, this is the ceiling limit allowed in this type of mortgage. This mortgage also ends in other instances besides the end date of the contract. The obligation to pay is rescinded if ever the borrower or debtor dies, the property that is subject of the mortgage is sold or the owner, debtor or borrower leaves the property in question. If you want to know further details regarding this type of mortgage you can just consult the local financial expert located in your area or region in order to get further insight.