3 Things To Know Before Getting A Reverse Mortgage
If you are a senior and need some cash, you can evaluate reverse mortgages. A reverse mortgage is not a loan that everyone can get, but it can be helpful for those who qualify. If you are interested in getting one, you might want to know the following three things before applying.
If You Qualify for One
A reverse mortgage lets you borrow money against your home, but you should only apply for one if you meet the eligibility requirements. One of the most important ones to know is the age requirements. You cannot get a reverse loan unless you 62 years old or older. People under this age do not qualify, and every name on the home's title must be a person that is this age.
Secondly, you cannot borrow money against a second home through a reverse mortgage. These loans are only available for primary residences. Finally, you must have enough equity in the property. Most lenders require at least 50 percent equity, but some might require more. If you meet these requirements, you can apply for a reverse mortgage if you decide that it is a good option.
The Way It Works
The second thing to know is how it works. You should not apply for a reverse mortgage without understanding the basic principles of these loans. When you take a reverse mortgage, you borrow money against your home. The bank might appraise your home to find out its value before approving your loan and will then approve the loan for a specific amount. The amount is typically a percentage of the home's value.
You can use this money to pay your bills, make home improvements, or anything else, and you will never pay it back while you are living there. The only time you must repay it is if you sell the home or move from it.
The Fees Involved With a Reverse Mortgage
The last thing to find out before getting a reverse mortgage is the fees you must pay. The fees vary, and you can talk to a lender to learn more about them.
You can find out the answers to these questions and others by talking to a mortgage lender. If you find out that you are eligible for a reverse mortgage, you can pursue getting one if you feel it is a good idea. You can learn more about a reverse mortgage by contacting a mortgage lender such as Choice Mortgage.