Facts About Reverse Mortgages
In order for a 62 yr old to convert the equity if their house into cash, they need to get a reverse mortgage. Before an individual decide to get a reverse mortgage, it is crucial that he understands fully the conditions and ramifications. The things that are related to reverse mortgage will be tackled in this article.
When you will get a normal house loan, what you need to do id to pay for the principal amount as well as the interest. In a normal house loan, as you are paying your monthly dues, your borrowed amount will go down while the equity if your house will go up. In a reverse mortgage, everything is doing the opposite. 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. There are many ways in which you can get the cash that you need. You can have your cash in a single lump sum payment. You can also have it on a regular monthly amount. You can also out it on a credit line account.
The cash that they wish to have can be theirs including the house that they owned. Once they receive the cash, the loan amount goes up while the equity of their house will go down. The total equity of the house cannot be more than the reverse mortgage that was approved. The one that loaned the cash can’t seek any payment other than the value of the house. The assets that you have and tea sets of your loved ones are protected by what is called as non-recourse limit.
But it is very important to pay the accrued interest as well as the principal amount. 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.
There can also be other factors that they will require the lender to pay their loan. If the lender fails to pay their property tax. If the lender fails to repair and maintain their home, they would have to pay their loan. The next factor is that if the lender failed to insure their house. The loan should also be paid if there is a declaration of bankruptcy. 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. They are different ways of obtaining money from the equity if your home. It is in a home equity loan that you will be required to pay the interest of the total amount that you have loaned.
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