Before I continue with reverse mortgage I want to discuss first what is mortgage. Mortgage is a legal term in which the transferability of the ownership of an immovable things has been executed such as house, plant and machinery, building or trees etc. which are used as a security of the loan or a loan is to arranged for. For example if a loan is arranged to buy a house so the security of the loan is the proposed house which is to purchase and the process of transferring the ownership of the house in favour of the lender is called Mortgage and the borrower has to pay its EMI on monthly basis or on agreed terms and as soon as the loan amount completed the mortgage has been canceled and the ownership of the house go back to the owner of the house.
But today's topic is Reverse Mortgage. Reverse Mortgage is also a type of loan in which the borrower take loan against the mortgage of his house or we can say that reverse mortgage is a loan in which a home owner can borrow money against the value of his or her home. In reverse mortgage no repayment of any principal or interest is require to pay until the borrower dies or the home is sold.
The concept of this type of loan come into existence from the modernization of the society or dis- couragement of the joint family system. In this new age of the society every one want to live in nuclear family means husband, wife and their children. Unfortunately in this nuclear family there is no room for their old parents when they want that some body is there to talk to them.
So the concept of the reverse mortgage come in to the exitance to fulfill the basic requirements to live the old couple. Reverse mortgage give an opportunity to have money (loan) from the financially institute against the security of their home and a mortgage is to be done in the name of financial institution but no installments has to pay by the old couple. On the death of the couple if the nominee want to take back it's paternal property they have to paid the full loan money with interest to the Financial Institute and the Financial Institute cancel the mortgage then the nominee can authorized to legally transfer the property in his name. It is called reverse mortgage. If no body claim the property than the finamcial Institute legally authorized to sale the property and adjust the outstanding against this property.
Home owners who are 62 years or older that enables them to convert part of the equity in their home into cash.
The product was conceived as a means to help retirees with limited income use the accumulated wealth in their homes to cover basic monthly living expenses and pay for health care. However, there is no restriction for how reverse mortgage proceeds can be used.
Borrower Requirements and Responsibilities
Age qualification: All borrowers listed on title must be 62 years old.
Primary lien: A reverse mortgage must be the primary lien on the home. Any existing mortgage must be paid off using the proceeds from the reverse mortgage.
Occupancy requirements: The property used as collateral for the reverse mortgage must be the primary residence. Vacation homes and investor properties do not qualify.
Taxes and Insurance: You must remain current on your real estate taxes, homeowners insurance, and other mandatory obligations, including condominium fees, or you are susceptible to default.
Property Condition: You are responsible for completing mandatory repairs and maintaining the condition of the property.
Conveyance of the mortgaged property by will or operation of law to the estate or heir after mortgagor's death:When a reverse mortgage becomes due and payable as a result of the borrower's death and the property is conveyed by will or operation of law to the estate or heirs (including a surviving spouse who is not on title and therefore not obligated on the HECM note) that party (or parties if multiple heirs) may satisfy the HECM debt by paying the lesser of the mortgage balance or 95% of the current appraised value of the property.
In my view reverse mortgages is the best set to provide economic freedom at the age when there is no source of income.
But today's topic is Reverse Mortgage. Reverse Mortgage is also a type of loan in which the borrower take loan against the mortgage of his house or we can say that reverse mortgage is a loan in which a home owner can borrow money against the value of his or her home. In reverse mortgage no repayment of any principal or interest is require to pay until the borrower dies or the home is sold.
The concept of this type of loan come into existence from the modernization of the society or dis- couragement of the joint family system. In this new age of the society every one want to live in nuclear family means husband, wife and their children. Unfortunately in this nuclear family there is no room for their old parents when they want that some body is there to talk to them.
So the concept of the reverse mortgage come in to the exitance to fulfill the basic requirements to live the old couple. Reverse mortgage give an opportunity to have money (loan) from the financially institute against the security of their home and a mortgage is to be done in the name of financial institution but no installments has to pay by the old couple. On the death of the couple if the nominee want to take back it's paternal property they have to paid the full loan money with interest to the Financial Institute and the Financial Institute cancel the mortgage then the nominee can authorized to legally transfer the property in his name. It is called reverse mortgage. If no body claim the property than the finamcial Institute legally authorized to sale the property and adjust the outstanding against this property.
Home owners who are 62 years or older that enables them to convert part of the equity in their home into cash.
The product was conceived as a means to help retirees with limited income use the accumulated wealth in their homes to cover basic monthly living expenses and pay for health care. However, there is no restriction for how reverse mortgage proceeds can be used.
Borrower Requirements and Responsibilities
Age qualification: All borrowers listed on title must be 62 years old.
Primary lien: A reverse mortgage must be the primary lien on the home. Any existing mortgage must be paid off using the proceeds from the reverse mortgage.
Occupancy requirements: The property used as collateral for the reverse mortgage must be the primary residence. Vacation homes and investor properties do not qualify.
Taxes and Insurance: You must remain current on your real estate taxes, homeowners insurance, and other mandatory obligations, including condominium fees, or you are susceptible to default.
Property Condition: You are responsible for completing mandatory repairs and maintaining the condition of the property.
Conveyance of the mortgaged property by will or operation of law to the estate or heir after mortgagor's death:When a reverse mortgage becomes due and payable as a result of the borrower's death and the property is conveyed by will or operation of law to the estate or heirs (including a surviving spouse who is not on title and therefore not obligated on the HECM note) that party (or parties if multiple heirs) may satisfy the HECM debt by paying the lesser of the mortgage balance or 95% of the current appraised value of the property.
In my view reverse mortgages is the best set to provide economic freedom at the age when there is no source of income.
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