A reverse mortgage is a new type of home loan that you should not repay as long as you are still living in that house. With a reverse mortgage, you can borrow your mortgage in cash without repaying the monthly loan and without moving out of the house, and this cash can be repaid in several ways as you can repay at the same time for a single amount. of the amount, or of the monthly income, or of a credit account that you can determine the amount of unpaid income or a combination of any of these methods.
No matter how you repay the loan, you do not have to pay anything until you die or sell your home, or move out of your home permanently. To qualify for a reverse mortgage you must have your own home and your age must be 62 years or older.
In another type of loan, lender will check your income documents to verify your monthly payment status, but in reverse mortgage there is no need to repay the monthly loan, so you do not need any proof of income and you still qualify for a mortgage loan.
With some loans you may lose your home if you do not pay every month, but in reverse mortgage you may not lose your home by default, especially repaying a mortgage does not require you to pay as long as you live and that is why a mortgage loan is different from other loans.
With a reverse mortgage your debt increases and the equity of your home decreases, as the lender lends you money and does not pay, and the loan value increases as interest is added to your balance loan and eventually, your debt increases and your equity decreases unless your mortgage rate increases. If the value of your home decreases there will be no equity left over the value of the loan so it is nothing more than spending the same amount of money on your home while living in your home without the need to pay.
The only difference with a mortgage loan is when you return the loan at a later date without paying interest on which your loan will remain and your equity will increase with the increase in the value of the home. But often the value of a home does not increase with higher prices and interest rates are also charged so in the long run most the repayable loans end up with “falling equities and growing debts”.
Who is eligible for a reversed mortgage?
You must be at least 62 years old and have a balance in your home. You have a balance in your home if your home is more expensive than what you owe.
Here's how it works
When you buy your home, the bank loaned you the money to buy it and you pay them back with monthly mortgage payments. A reverse mortgage is an opposite. With a reverse mortgage, the bank pays you a monthly payment from equity on your home. You return the money when you sell your home, refund, permanently exit, or pass away. At that time, you or your heirs must repay the loan and interest on the same payment.
How do I get a reverse mortgage?
Reverse mortgages are available from many major banks and lenders. You can apply online or contact to your Bank.
Here is what happens when you contact a lender:
An inspector who will determine the value of your home. The lender will tell you how much you owe based on your age, equity in your home, and the cost of the loan. You can receive the money either in a lump sum or in monthly payments, As a credit line that allows you to decide how much money you are going to spend, and when you are going to spend it. You are signing a contract. The contract will specify the payments you will receive and the amount you have to pay including interest.
Things to consider
Reverse mortgages are more costly than typical home loans or home equity credit lines. They also have higher interest rates and fees. Interest is charged on the outstanding balance and is added to the amount you owe each month. This means that your total debt increases each month. So Keep in mind that you are borrowing equity from your home. This means fewer assets for you and your heirs.
How much money do you get from a reverse mortgage?
Based on the cost of your home bank will determine the maximum amount of money you can get as a loan using your location. Most banks offer 80% of real estate under the Reverse Mortgage program. So if you have a house that costs Rs. 1 crore, the maximum loan amount you can get Rs. 80 lakh.
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