Many people dream about and even idealize life after retirement, but when push comes to shove, and there’s just not enough money to go around when you can actually do things you’ve always wanted to, you need to make a plan. This is the point where some knowledge about a reverse home loan comes in handy, because if you are over the age of 62 and looking for financial solutions, this could be exactly what you’ve been looking for.
Do I do it alone or with the state?
A reverse home loan can be granted to you in one of two ways: Either through a government agency, or a bank or any other private lender. If you get the loan via a private lender, its formal name is a reverse mortgage. If you get one wire a government agency, it is known as a home equity conversion mortgage. But options are subject to certain laws and your lender will be able to help you out with the specifics around each option.
What about payback?
Although the repayments on a normal loan is stressful for many people, a reverse a home loan works slightly differently. A reverse home loan has no actual repayment due, until the end of the loan comes around. It will automatically come to an end if you move out of the house to which the loan is bonded.
How do you know if you qualify?
In order to be eligible for a reverse mortgage, you need to be 62 years of age or older, and you need to live in the house against which you want to take out the loan, permanently. Different companies can offer you different rates for loans, so make sure to shop around first. Although you won’t be able to borrow the full equity value of your home due to restrictions by federal laws, you will be subject to a detailed background and credit check, to find out what the overall value of your house is, what your financial status is, and what percentage of your home’s overall equity you can receive in the form of a loan.
Everything that affects your borrowing capacity will be covered by the background check, and you will need to be up to date with your property taxes, insurance payments and general maintenance of your house if you want to get a decent return on your application.
Home is where the loan is
Being the primary owner of your house and living in it permanently is one of the main conditions of a reverse mortgage being made available to you. If you own a property with multiple residences on it, you still have to live in one of them permanently as your main residence. The overall value of the property should be high enough to make sure that if any costs are still outstanding at the end of the loan term, they will be covered by the sale of the house.