For every senior that are thinking of applying reverse mortgage loans, their main concern is not actually the loan itself, but what's more important is their needs. Their needs will determine how they will organize their financial situations according to the necessity. However, before a senior goes on to get a reverse mortgage loan, it is important to know all the details of these loans and what they have to offer in order to avoid being cheated by some false-hearted lenders.
1) How Much Can A Borrower Get?
There are three aspects that will fairly affect the amount of the loans. That may include the age, interest rate and the appraised value of the property. In fact, the older you are, the more you will get as they will increase your home value and lower the interest rate. Borrowers will only have to pay back all the costs after the loan is closing.
2) What Kind Of Payments Can Borrowers Get?
This is up to the seniors to decide whether they want to be paid in the form of lump sum, credit line, monthly payment or even as a combination of all these. A person, who has no specific purpose but is in need of the money, can take it part by part as a credit line. If your needs are for example medical bills or to make a home repair, you can always opt for a lump sum and then repay the money monthly.
3) What If Borrowers Can't Pay?
This is the good thing about reverse mortgage loans. These loans have been imposed with mortgage insurance which will guarantee two things. First, whenever the selling price of your house does not cover the total costs, the business insurance company will pay the difference. Second, the lenders will get their money for sure. This special insurance is very crucial to prevent you from owing the lender more than your house value and it also eliminates the risk of losing your home.
4) Will The Payment Be Taxed?
No, definitely not. The money you get from the lender will be considered free from tax implications. This is always the best way for seniors to get the money they need and the reason behind it is simple, because you have already paid the taxes once, in your first mortgage.
When it is time for the loan to close, the home will be sold and charges like the mortgage premiums, servicing fees, origination fees and so on will have to be paid to the lenders. All the fees and costs that have been set by the lenders will be told to the applicants before signing the contracts. Additionally, you may choose to have a fixed or variable interest rate.
Make sure to read carefully and understand all the details about reverse mortgage loans as well as all the alternative solutions that might be useful before committing to one. You will be bound to the contract for a long period of time, so do not let any of your judgment being misled by the current contract benefits possibility.