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Important Facts You Need To Know About Reverse Mortgages

In order for a 62 yr old to convert the equity if their house into cash, they need to get a reverse mortgage. Understanding reverse mortgage and its ramifications are very important before an individual decides to get one. The things that are related to reverse mortgage will be tackled in this article.

If you are going to have a normal home loan, the thing that you will have to do is to pay the principal amount as well as the interest. In a normal house loan, as you are paying your monthly dues, your borrowed amount will go down while the equity if your house will go up. In a reverse mortgage, everything is doing the opposite. It is a reverse mortgage that you can convert the equity of your house into cash. Monthly payments will not be paid by you. 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. You can also get your cash on a regular monthly payment. If you wish, you can also place the cash on a credit line account.

It is in reverse mortgage that the homeowner still owns the house and gets the cash that they wish to have. Once they receive the cash, the loan amount goes up while the equity of their house will go down. The total equity of the house should be as the same value and not higher with the cash loaned in a reverse mortgage. The value of the house should be the same value that the lender must seek. Your other assets including the assets of your house are protected by what is called as a non-recourse limit.

The principal amount including the interest should be paid. If the owner of the property dies, sells the house, or moved to a new home, then he has to pay the loan. If none of these instances happened, then the lender will not be obliged to pay the loaned amount.

There can be some factors why a lender will be required to pay their loan. 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. The loan should also be paid if there is a declaration of bankruptcy. If you will abandoned your house, you also have to pay the loaned amount. If there is fraud and misrepresentation, then you will be required to pay the loan.

Reverse mortgage should not be mixed with home equity loan. These are different methods in obtaining money from your loan. These loans are the types of loans that will require you to pay the monthly interest on the total amount.