The term reverse mortgage is one that many people have heard but perhaps do not fully understand. To put it simply, a reverse mortgage is a loan type in which the homeowner can withdraw part of their equity. Among the key benefits of this loan type is the fact that it does not have to be paid back until the homeowner leaves the property. The Home Equity Conversion Mortgage is among the most popular of the types of reverse mortgages currently available to today’s homeowners in the United States.
The Specifics of Reverse Mortgage Eligibility
There is a list of requirements that applicants must meet to qualify for a reverse mortgage. The primary requirement in a reverse mortgage is for the homeowner to be 62 years of age and up. Under the right circumstances, it is still possible for a reverse mortgage to be obtained if one of the spouses is under 62 years of age. One point that is important to consider is that a qualified homeowner might not be able to borrow their full home value in their reverse mortgage. The amount that can be borrowed is based on the age of the spouse not listed as the primary borrower or the age of the youngest borrower involved in the transaction. In the realm of reverse mortgages, higher principal limits are generally available the older the primary borrower is. This age factor also affects the value of the property and interest rates.
The Pros and Cons Related to Reverse Mortgages
There are several key pros and cons related to the topic of reverse mortgages. The pros include the fact that monthly payments do not need to be made on the loan balance. Other additional advantages include having extra money to be able to enjoy one’s later years and pay off existing debts and expenses related to healthcare. Disadvantages include the fact that the loan borrower will have to have to continue to keep their house. This includes the maintenance of key points such as their homeowner’s insurance. It is also true that the fees associated with these loans can tend to be high. Despite these cons, homeowners tend to find the benefits outweigh the negatives.