Facts About Reverse Mortgages
It is through reverse mortgage that people that are 62 yrs. old and above can convert the equity of their house into cash. 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. The equity of your house will go up while the amount that you have loaned will also go down. Everything is opposite when it comes to reverse mortgage. It is a reverse mortgage that you can convert 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. If you wish, you can get your cash on a monthly basis. Or you can put 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 t amount that was approved for a reverse mortgage should not be higher than the total equity of the house. The one that loaned the cash can’t seek any payment other than the value of the house. The non-recourse limit is the one that protects your assets and the assets of your heirs.
It is still required to pay the principal amount and the interest. You will have to pay the loan if the owner of the house dies, sells the property or moved to another home. But if none of these occurs, then there is no need to pay the loaned amount.
The lender will have to pay their loan if these circumstances also happen. The first factor is that is the lender has failed to pay their property tax. If the lender fails to repair and maintain their home, they would have to pay their loan. If the lender failed to ensure their house, then they will have to pay the loan. You will have to pay the loan 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. These can be methods to obtain money from your equity but they are totally different. 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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