Understanding Reverse Mortgages
No, reverse mortgages do not refer to mortgages that are higher than the home value. Reverse mortgages do not, in fact, have anything to do with the mortgage crises of recent years. These are Austin home loans given to people 62 years old or older who have high levels of equity in their home. Reverse mortgages allows senior homeowners to convert some of the equity in their home into cash while retaining home ownership. This kind of loan doesn’t have to be repaid until the home is sold, the senior homeowner moves onto some other type of residence or through a settlement of the estate.
Reverse Mortgage Requirements
There are three main requirements for a reverse mortgage:
- the applicant must be at least 62 years old
- own their home outright or have a small amount owed on the mortgage, and
- the home must be their principal residence.
The actual amount of the loan and the loan interest rate are determined by different factors, like the appraised value of the home, the age of the loan applicant and whether the loan will be taken in one payment or several payments.
Determine if a Reverse Mortgage is right for You
Reverse mortgages allow senior adults to use the value of their homes to pay off other debts, attend to medical needs or even enjoy travel. A good thing about reverse mortgages is that the ownership of the home remains with the borrower, which can be reassuring for seniors and their families. However, it’s important to keep in mind that a reverse mortgage is a rising loan, meaning that because the loan is not being paid back monthly, the amount of the loan continues to rise. As with all Austin home loans, applicants should compare lenders before signing the dotted line. It is important that applicants understand the ins and outs of a reverse mortgage and are not being taken advantage of by greedy family members or predatory lenders.