Reverse Mortgages: Special Home Loans

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There are a lot of retiree perks you can enjoy. One is eligibility for a special type of home loan at age 62. It is known as a reverse mortgage, and it is tailored to the needs of a retiree. Here is what you need to know about this special type of home loan and how it can potentially benefit you.

Reverse Mortgages: Special Home Loans
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Reverse Mortgage Funds and Bill Payments
A traditional mortgage requires you to repay what you borrow in chunks of a minimum specified amount at a time. You also have a total repayment deadline to meet. Since you receive a mortgage bill monthly, you have the stress of having to repay it while paying for your other financial obligations.

A reverse mortgage is opposite in several ways. The most obvious is you can potentially receive reverse mortgage funds monthly, rather than paying some back each month. The installment option allows you to get the money you need to pay your cost of living expenses or other bills you need to pay.

Flexibility of Mortgage Funding Receipt Methods
Although receiving money each month is a commonly chosen option for a reverse mortgage applicant, you do have other choices. You can ask the lender for one large payment, for instance. That might make sense when you are dealing with a large expense. If you are more worried about how to pay for frequent but unexpected expenses, a line of credit option is available.

Important Reverse Mortgage Agreement Duration Information
The duration of a reverse mortgage agreement is somewhat up to you. You do have to follow rules established at the start of the contract. However, as long as you follow those rules, you can take as long as you want to repay what you owe. One of those important rules is you cannot move out of your house. Doing so violates the terms of the loan agreement.

A traditional mortgage lasts for an exact period of time, such as five years. The unusual nature of the repayment terms of a reverse mortgage give you the opportunity to borrow money unhindered for a much longer, yet inexact, period of time. It is important to understand the balance will still eventually be due, but in the meantime you can enjoy your retirement in a low-stress way, at least financially speaking.

Rules to Follow When You Borrow the Money
Before you can borrow reverse mortgage money, there are some rules you must follow and terms you must agree to. One is that you can only borrow a portion of the total home value you have. You also have to pay fees associated with the setup of the loan, such as closing costs. Additionally, you have to agree to use some of the money to quickly rid yourself of your traditional loan balance, if you have one.

Types of Reverse Mortgage Agreements to Consider
The two main types of reverse mortgages are government home equity conversion mortgages, or HECMs, and proprietary reverse mortgages. The latter are any mortgages offered by local banks, as opposed to government organizations. Government reverse mortgages are insured by the government. Other reverse loans are not, but they are still somewhat government controlled.

In the reverse mortgage world, there are also borrowing caps. There are standard borrowing caps and jumbo reverse loan borrowing caps. Jumbo loans are designed to provide more money in cases where the property in question has a high value.

Reverse Mortgage Final Decision Making Factors
Some factors in the reverse mortgage eligibility determination process are out of your control. For example, you cannot get one until you are 62 years old. However, other factors have to do with your personal needs and preferences. If you want to stay in your home for a long time without having to deal with making ongoing payments on a standard home loan, this non-traditional mortgage option could help you.

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