Important Facts You Need To Know About Reverse Mortgages
It is through reverse mortgage that people that are 62 yrs. old and above can convert the equity of their house into cash. 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.
The interest and the principal amount is what you are going to pay in a normal house loan. In every month that you are paying, the amount will go down while the equity of your house will go up. When it comes to reverse mortgage, everything is the opposite. You will be able to convert the equity if your house into cash in a reverse mortgage. You will not be required to pay the monthly payments. There are many ways in which you can get the cash that you need. It can be in a single lump sum payment. If you wish, you can get your cash on a monthly basis. 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 cannot be more than the reverse mortgage that was approved. The one that loaned the cash can't seek any payment other than the value of the house. The non-recourse limit is the one that protects your assets and the assets of your heirs.
But it is very important to pay the accrued interest as well as the principal amount. You will have to pay the loan if the owner of the house dies, sells the property or moved to another home. But if none of these occurs, then there is no need 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. The next factor is that if the lender fails to maintain and repair their home. If the lender failed to ensure their house, then they will have to pay the loan. If there is a declaration of bankruptcy, then you will have to pay the loan too. 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.
A home equity loan is different from reverse mortgage. They are different ways of obtaining money from the equity if your home. These loans are the types of loans that will require you to pay the monthly interest on the total amount.
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