This short reverse home mortgage article tries to tackle some of the wrong myths by offering the correct answers to the key questions. However, if a senior is really interested about the reverse home mortgage, he or she should absolutely meet the counselor. This would allow him to make all the needed questions.
1. Does A Bad Credit Influence On The Qualification?
The reverse home mortgage is always taken against the equity of the home, i.e. the equity is the only guarantee for the loan. This means, that the incomes or the credit score of the borrower has no influence on the qualification, they are not even asked.
Ther is an absolute maximum of $ 625.000 set by the law. The loan amount depends on three factors. They are the age of the borrower, the appraised value of the home and the level of the interest rate. The older the borrower, the higher the appraised home value and the lower the interest rate, the more a senior can get.
2. The Traditional Mortgage Must Be Paid Away.
The reverse home mortgage eats the equity, which the traditional mortgage has built. A senior cannot have the traditional mortgage and the reverse mortgage at the same time. So if he will take the reverse loan, he has to pay away the traditional mortgage. And this is the target, because the idea is to arrange more disposable cash for a senior.
3. The Reverse Loan Affects Your Chances To Get Medicare Or Other Social Security Benefits.
Usually the reverse loan does not influence on these social benefit programs, but a senior must be sure about this. A careful financial planning is honestly needed. It is absolutely wise to meet the federal counselor to get the facts and the needed guidance.
4. If A Senior Will Pass Away, The Heirs Are Responsible About The Loan Payment.
This is not true. The only guarantee for the loan is the home equity and if it does not cover all the expenses, the obligatory mortgage insurance will pay the missing part. This means, that the heirs will never pay for the reverse loan and the other assets of a senior will never be used to pay the loan.
5. When The Loan Is Due, The Lender Will Sell Your Home.
When the loan is due, a senior has to pay away the loan capital and all the expenses. His options are to sell the home and to use the selling price to pay these amounts or to pay them from his other assets and to keep the home.
The reverse home mortgage is a useful product for some seniors. But before you go any longer, it is wise to make a list of questions and to contact the reverse mortgage counselor, because only the expert can guide you, also about the alternatives.
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