What is a Reverse Mortgage?
A reverse mortgage is a loan intended for senior citizens who happen to be 62 and older. Reverse mortgages, as you might have guessed by the name, are the opposite of typical mortgages. When a person gets a mortgage from a bank, this person is given a lump sum of money to purchase a home, and then has to pay back that money plus interest through monthly installments for an agreed period of time which is typically 20 or 30 years. With a reverse mortgage, on the other hand, the bank or other financial institution will pay someone a monthly sum for the equity of their home; it is much like selling your home back to the bank and getting monthly installments for it just like you bought it. Reverse mortgage loans are insured by the Federal Housing Administration (FHA.) An important thing to keep in mind when considering one of these loans is that the homeowner is still liable for property taxes, insurance, and proper maintenance of the home once he or she accepts a reverse mortgage home.
How much money can I get?
Some of the most common reasons that lead people to apply for reverse mortgages include medical bills and daily living expenses during retirement. You might be wondering how much you can expect to get in monthly installments with a reverse mortgage at this point. There are several things that lenders take into account when deciding how much to offer in a reverse mortgage loan such as the value of the home, the home’s equity, the borrower’s age, and a set maximum lending limit. Among these considerations, the home’s equity is arguably the most important aspect. Your home’s equity is what it is appraised at minus what you owe on it. You can typically expect to get about 85% of your home’s equity in a reverse mortgage loan although that figure will vary from one lending entity to the next. Click this link here for more information.
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