Know the Hidden Facts of Reverse Mortgages
Author: Joy Mali
Income, finances, investments and other monetary activities are dealt with differently depending on the classes, gender, age groups and careers of people. While some people might be interested in investing in educational loans, home loans and bank loans, there is this so called Reverse Mortgage offered to senior citizens, sixty two years old and above of age. Explained below are the facts about reverse mortgages that should be read and understood before applying.
Reverse Mortgages
This type of loan is applicable to individuals or couples who already own a home and are in their retirement ages. It is a lifetime mortgage for which they are not required to make a payment until they die. The mortgage loan is only approved after careful review of their credit history, although the credit history is not much of a deciding factor. After the mortgage is approved, senior citizens will be able to accept a lump sum payment depending upon the value of their assets every month over the span of their lifetime. The loan could then be repaid by selling the property after they have lived in it.
Read on to know the different results of the Reverse Mortgages Loan.
1. Elders might have to leave their properties due to age or health reasons
This means that it is not mandatory that the mortgagee is never going to leave the place before he or she passes away. Additional care might become a primary requirement for them which would become an extra cost aside from the taxes, insurance premiums and mortgage interest. It would mean leaving the home longer than originally intended. This condition might lead to the homelessness of the elders who applied for the loan. It will result to greater harm than bad looking credit reports could do.
2. What happens to the dependent
If something happens to the borrower, it would directly impact the dependent as they have to be displaced to make the property available for selling. As for the rules of reverse mortgage, all the non-borrowing dependents are tenants who would have to move out of the house in the event of the death of the borrower. The affected dependents might be the children, the grand children or the spouse.
3. In case of non-payment of cost associated with the property
As discussed earlier, the cost of the house can be more than the monthly payment of the reverse mortgage you are getting. This would still land you in trouble if you don't repay it. Your property will be defaulted and your property will be forced to be put up for foreclosure. Because this kind of loan are especially made for elders, there are chances that they might not remember the monthly costs due to their age, this chance might result to losing their property permanently.
4. Encumbrance on Heirs
The mortgage payment has to be done by the heirs if the borrower's weren't able to do so. This can be a burden transferred unintentionally in which the heirs have no choice but to deal with.
Article Source: http://www.articlesbase.com/mortgage-articles/know-the-hidden-facts-of-reverse-mortgages-6211717.html
About the AuthorJoy Mali is an active blogger and shares extremely interesting financial management tips over the web that encourages people to check credit score regularly & to build a working credit report for a happy financial life.
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