When you are old and you are still troubling over your home mortgage, you do not have to fret since a special type of mortgage is available for you. A reverse mortgage loan will certainly help you in your finances especially if you qualify for one.
So, what exactly are reverse mortgage loans? Reverse mortgage loans are loans that are available to homeowners who are 62 years old and above. This type of mortgage loans work by converting part of the home equity to tax-free income. These loans are termed as reverse mortgage loans because contrary to traditional mortgage practice, they require the lenders to pay out specific amounts to the borrowers.
To be eligible for reverse mortgage loans, you must be at least 62 years old, are a homeowner and have enough equity in your home. Properties that are eligible for this type of loans include homes that are built after June 1976, townhouses, single family homes, condominiums, and 2-4 unit properties.
You may be wondering, how much money do I get when I avail of reverse mortgage loans? Actually, the amount of pay-out depends on your age, your home’s value, interest rates and lending limit. But take note that the older you are and the higher the value of your home, the more you will get for the pay-out.
Pay-outs for reverse mortgage loans can come in lump sums or as fixed monthly payments. And it is all up to you how you wish to spend the money. Whether you are using the money for an existing mortgage, to renovate your house, or simply go on a well deserved vacation, the money is yours for the taking.
Even if you have an existing mortgage, you can still avail of this type of loan, provided that the reverse mortgage is in senior position. You can pay the existing mortgage with proceeds from the reverse mortgage or from your own savings.
Before approval of reverse mortgage loans, however, you have to undergo counseling. This is to ensure that you understand the terms and conditions of this type of mortgage loans. Payments for the loans are not necessary while they are still outstanding. The only time the loan is repaid is when you die, or when you transfer or sell your home.
Although reverse mortgage loans are ideal, you have to consider other cheaper alternatives as well, especially if you intend to stay in your home for 2-3 years only. When you are looking for other loan options, you should explore all the different types of mortgage loans that are available and find something that will suit all your needs.
Mortgage refinance loans are used by people for many different reasons. The reasons that people have for taking out this kind of loans usually involve a sudden change in finances. This sudden change in financial status can come about because of many reasons. It can be because of a new addition to the family, like a baby, or a new acquisition that requires a need for extra money every month. Another reason can be a change in jobs or in salary. These situations that cause a change in financial standing may compel people to take out mortgage refinance loans because of the burden that their present mortgages give them.
How do mortgage refinance loans work? A mortgage refinance loan is essentially a second loan that is taken out to cover the first one. When people take out refinance loans, most of them use the loans to pay off their existing mortgages as the new loans actually give them a new method or mode of repayment. The repayment rate of a mortgage refinance loan is basically lower than the rate of the previous loan, although the time it takes to pay off this loan is a lot longer than that of the original one. This means that mortgage refinance loans are second loans that offer people the opportunity to continue paying for their houses at lower and more pocket friendly rates.
There are quite a few reasons why people may opt for mortgage refinance loans. One of the reasons why people may need to get hold of lenders that offer refinance loans is the sudden lack of ample cash to pay the existing mortgages that they have. The original mortgages may have been taken out when they were still financially stable and the amounts that they had to pay off every month were still within their paying capabilities. When a refinance is taken out, the amount is usually enough to pay off the principal amount and interest of the original mortgage, and the borrower is given a fresh loan to pay off at friendlier terms. The terms of mortgage refinance loans run for longer periods of time at smaller increments, meaning that they will be paying off their houses for much longer than they originally expected to.
The lack of ample cash that prompts people to consider mortgage refinance loans often comes with a sudden change in their lives or situations. This may mean that they had a change in their finance standings due to a change in job, a sudden cut in their monthly incomes, a recent addition to their families or any other event that suddenly puts them in financial difficulty.
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