Looking to get a mortgage and compare home loans is not a simple process? There are many different types of home loans, and lenders can be very strict about who is able to take out a line of credit. For instance, each lender establishes their own criteria for a down payment, but most often you’ll need at least 3.5% of the total price down. Your credit score can be a huge factor too — it was found by the Home Loan Learning Center that a large percentage of lenders require a minimum credit score of 680 in order to be approved for a home loan. Since it is such a delicate process, sticking with your employer through it is essential.
But, for seniors, there is another option. Take a look at this explanation of reverse mortgages to find out whether it’s right for you.
Reverse Mortgage Definition
A reversible mortgage is a loan that is available only to homeowners who are 62 years or older and allows them to convert a part of their home equity into cash.
This type of mortgage was conceived in order to give retirees, especially those with limited income, to use the accumulated wealth in their homes in order to cover basic costs and monthly living expenses, including health care. But, there are no actual restrictions on how reverse mortgage proceedings can be used.
It got its name because instead of making monthly payments to a lender, the lender makes monthly payments to the borrower.
Furthermore, the borrower is not required to pay back the loan, unless the home is sold, or vacated. As long as the borrower lives in the home, they are not required to make monthly loan balance payments.
It is important to remember that the borrower is still responsible for staying current on property taxes, homeowners insurance, and if applicable, any homeowners association dues.
In order to be eligible for a reverse mortgage, you must be a homeowner 62 years or older. You must own your home outright or have low enough of a mortgage balance that can be paid off at closing, with proceeds from the new mortgage. Your home must be single family or a two to four unit home, which you occupy at least one of.
If you think this kind of home loan is right for you based on the reverse mortgage definition, contact reverse mortgage lenders near you to find out more .