Define Reverse Mortgage
A Guide To Help Answer Reverse Morgtage Questions!
If you were asked to define reverse mortgage, chances are you'd be stumped. If you don't fully understand the reverse mortgage definition, it's important that you learn more before deciding if this is an option for your financial future.
A reverse mortgage is a type of home loan that is designed to provide help for senior citizens that have equity within their homes. This allows them to withdraw a lump sum of cash to provide money for living expenses or for other purposes, but the amount they can withdraw can vary.
You can use the funds of your reverse mortgage according to your needs. Generally people use a reverse mortgage for the following purposes.
- To repair or modify your home.
- To cover your health care expenses.
- To clear all debts.
- To payoff property taxes.
- To take a well deserved vacation.
Unlike a traditional home equity loan or a second mortgage, there is no repayment needed for this mortgage until the borrower no longer uses the home as his or her main residence.
Define Reverse Mortgage 101
Here is a closer look at a reverse mortgage faq that will help explain reverse mortgage to you so you can easily understand this option.
Who is Eligible?
When trying to define reverse mortgage, it's important that you know who is eligible for this type of a mortgage. In fact, the question, "who is eligible" is one common reverse mortgage faq that is asked on a regular basis.
It's easy to explain reverse mortgage when it comes to who is eligible for this loan. To be eligible, you must be at least 62 years of age. You also need to completely own the home your have, although there are options for those who may only have a low balance left to pay off on their current mortgage.
What Types of Homes Apply?
Another common reverse mortgage faq is, "What types of homes apply?" When you define reverse mortgage, it's important that you find out what home will be accepted for this type of mortgage.
According to the reverse mortgage definition by the FHA, you are only allowed to take out reverse mortgages on a home that is a single family home or homes that have 1-4 units in them. However, the homeowner must occupy one of those units. Certain manufactured homes and condos that meet the standards of the FHA may also be eligible for this option.
How Much Can I Borrow?
You may be wondering how much you can borrow with a reverse mortgage, which is an important question when trying to define reverse mortgage. You'll actually find that the actual amount of money you can be approved for is going to depend on several different factors.
Some of the factors that are going to affect how much you're able to borrow include your home's value, your age, the limits for your area by the FHA, and the interests rates at the time you want to take out the mortgage. There is no set amount - each mortgage is decided based specifically on the individual case.
What Happens If I Die Before the Loan Ends?
To explain reverse mortgage a bit further, it's important that you know what is going to happen if you die before the loan ends.
This is another popular reverse mortgage faq. If this occurs, any heirs you have that will inherit the home involved in the reverse mortgage will be required by the FHA to repay this loan. Not only will they have to pay the loan amount, but any other fees and interest that has been incurred. Any equity that may remain is going to belong to your heirs.
Now that you understand how to define reverse mortgage, it's important that you keep this warning in mind. Using a service that charges any fees for referring you to an FHA lender should not be used.
Free information is given out by the FHA, including reverse mortgage faq section. If you need someone to explain reverse mortgage, you'll find that counseling from the HECM is often available for free or for a small fee.
You never want to spend extra money on services that will charge you for this information. In many cases, these services are scams that you need to avoid.
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