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Reverse Mortgage

A reverse mortgage is basically a loan that is taken against your home once you have already paid it off. You do not have to pay back a reverse mortgage immediately - you simply just sit back and receive money. This is how it all works.

To qualify for a reverse home mortgage, you need to first own your home. In addition to this, you need to be 62 or older. Apart from this, there are no other requirements, so reverse mortgages are relatively easy to obtain. You do not even have to get mortgage insurance. Unlike normal mortgages, the lender does not check your credit record or look at your income in order to see if you can pay back the loan. This is because you will not be making monthly payments on the loan. In fact, no money need be returned unless you die, sell your home or leave your home permanently. Of course, when this happens, the full amount that has been loaned will be paid out of the profits of the sale.

Because you have no monthly payments to make, you do not need to worry about your home being taken away from you. The only danger in reverse mortgages comes from the value of your property falling below what you have mortgaged it for. Therefore, if the property market looks like it may fall through over the next ten to thirty years, it would be wise not to mortgage your home to the full extent possible.

When you pay off a conventional mortgage, your debt decreases and the extent to which you own the property – your equity – increases. With a reverse mortgage, it is your debt that increases and your equity that decreases. Thus, you are essentially selling your property for money. Only, you do not have to move off the property until you wish to.

You may prefer to take the money you will receive from the reverse mortgage all in one go. Or you may choose regular monthly payments. You may also choose to use it as part of a credit-line account. Combining all these choices is yet another option. Whatever you choose, reverse mortgages offer a new means of income for you.

But why would you choose to sell off your home? Well, if you have no dependents that will receive the property, a reverse mortgage gives you access to the value of your property while you are still alive. Or, if you plan to move in with family at a later stage, you can choose to receive the money in one lump some and use it for alterations to the family member’s home. It can also provide a very valuable additional income to pensioners. Whatever reason you have for wanting to reverse mortgage your home, you may consult your mortgage broker for more information thereon.

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