Reverse Mortgages ? a Reversal of the Mortgage Process

Mortgages have assumed a number of characters from the time of their inception. The traditional mortgages used to be of the repayment type. Every month the mortgagor used to pay a certain amount towards both principal and interest. Sensing the hardships that people have to face in making these payments, mortgage providers came up with interest only mortgages. But the present day customer is more pampered. He needs a mortgage where he enjoys the cash, but is not required to pay a penny towards the repayment.

A reverse mortgage is a perfect solution to such requirements. It allows a homeowner to plough the equity in his home to get cash. While the borrower enjoys cash on the mortgage, he is rid of any monthly payments.

The amount of loan received on the reverse mortgage will depend on the age of the borrower and the value of the home. The borrower has no obligation to repay the loan as long as he continues to reside in the house or as long as he survives.

To understand the reverse mortgage, it will be beneficial to compare it with forward mortgages. The forward mortgages are the traditional mortgages. These require a monthly payment either towards both principal and interest, or only towards the interest. This way the forward mortgage is repaid at the end of the repayment period.

However, reverse mortgage works opposite to the forward mortgage (hence the name). The lender advances money to the customer, for which he receives no payment. This means that the debt goes on increasing. Simultaneously the equity in home decreases. This is a rising debt and falling equity scenario. The amount of debt can never increase the value of the home. Thus, the mortgage provider, at the time of repayment, can only lay claim on the home.

Reverse mortgage is only available to people who are 62 years or more of age. The home to be mortgaged must be owned by the borrower, either individually or as a joint holder. He must have lived in the home for the majority of the years and this must be the primary residence of the customers.

Reverse mortgage is a good source of income for the elderly people. The borrower must decide the manner in which the amount received through the reverse mortgage is to be disbursed. The government does not tax the amount received on the mortgage, and the borrower is free to use the money in the way he likes. Customers who want a regular income can draw a regular monthly payment. Some customers want a credit line opened in their name so that they can draw cash as and when they want. For others the availability of a lump-sum amount is more important, since they can apply it for purposes that are more constructive. Even a combination of these options may be used to draw the money on mortgage.

The reverse mortgages are also distinct from the other mortgages on the ground that there is no limitation on the amount of income a person must have in order to be eligible for a reverse mortgage. The mortgage is secured on the home of the borrower. This shields the lender against any defaults on the mortgage. Therefore, credit history of the borrower is not much of a problem.

Keeping the home as collateral does not mean losing the right to stay in the home. The borrower can continue living in the home as long as they wish. The mortgage provider holds the right to the property, or the first mortgage. When the mortgage is repaid, the mortgage provider has to part with the rights to the home.

The mortgage will have to be repaid on the death of the last of the co-owners, if the borrower moves house permanently, or if the house is sold. Repayment of the mortgage also becomes due when the borrower fails to pay the property taxes, maintain the home, or pay the insurance of the home. Bankruptcy, letting your home, adding a new owner to the homes title, and being indicted in a fraud or misrepresentation are sufficient grounds on which the mortgage provider may demand repayment. If in case the borrower is not able to repay the mortgage, then the house will be confiscated.

Reverse mortgage leaves little equity in the home to be used by the heirs, unless the home equity is growing at an increasing rate. This will even impede the borrower from getting a secured loan or mortgage. Thus, even though a reverse mortgage is better because there is no obligation to make monthly payments, they must be taken with caution. Planning the repayment of the mortgage in advance, will let you enjoy the mortgage, while saving your house from repossession.

Aditya has completed his masters in mass communications from Jamia University. If you need UK Personal Loans, secured Loans,unsecured loans

visit http://www.ukfinanceworld.co.uk

---

Are You A Victim Of A Predatory Mortgage Foreclosure?

Help is available to borrowers who have claims against their... Read More

What On Earth are Home Equity Loans?

Home equity loans are one of the most common types... Read More

Unlock your Home Loan Piggy Bank

With the recent sharp increase in property values your current... Read More

Home Mortgages: Should You Apply Now?

If you're thinking about applying for a new mortgage or... Read More

Mortgage Debt Elimination

The prospect of mortgage debt elimination is something that many... Read More

Refinance Benefits - Refinancing Could Save You Money

The most common reason most people refinance is to save... Read More

Mortgage Terms Explained

When you are hunting for a mortgage, you will find... Read More

What is a Mortgage?

A mortgage is a loan, usually from a bank, finance... Read More

Why You Should Not Get Hung Up on the Interest Rates!!

This is what a mortgage can do for you!AND Why... Read More

Kings Bay Saint Marys & Kingsland Georgia - Affordable Home Mortgages

Buying a home is usually the largest purchase any of... Read More

2nd Mortgage - Better Than Refinancing

You have probably received refinancing offers in the mail or... Read More

How I Became a Hard Money Lender

Unlike other investors, my venture into real estate was a... Read More

Buying A Home? Reasons to Consider Financing Your New Home Loan Online

Financing your new home loan online can save you time... Read More

New Home Loan - Understand The Various Types Of Mortgage Lenders

So, you've decided to buy a house, and you're ready... Read More

Home Equity Loan Improvements

There's more Regulation Z compliance on the way, courtesy of... Read More

Home Equity Loans: A Useful Financial Tool

The investment need of an individual varies with time. Thus... Read More

Borrow on a Budget: Getting the Cheapest Home Improvement Loans

Getting the cheapest home improvement loans isn't always easy. It... Read More

The Power of a Home Equity Loan to Pay Down Debt

Households across the country are finding themselves in a similar... Read More

Home Loans -- Federal Regulators Warn Lenders to Be More Careful

Federal banking regulators have recently expressed some concern over the... Read More

Five Things Never To Tell Your Mortgage Lender When Facing Foreclosure

1. Never discuss your household finances over the phone with... Read More

Buying A Home With No Money Down or Bad Credit - PMI Can Make It Easier

Private mortgage insurance is an excellent method for homebuyers who... Read More

How To Get The Best Home Equity Loan

Are you wondering how to get the best Home Equity... Read More

Short-Term Interest Rates on the Rise; Adjustable Rate Mortgage Holders Prepare for Increase in Rate

Interest rates are on the rise and many home owners... Read More

Refinancing Your Mortgage Can Open Up A Lot Of Options For You And Your Family

It can happen to anyone, the roof is leaking, the... Read More

2nd Mortgage Loan After Bankruptcy - Get Approved Online

A 2nd mortgage loan after a bankruptcy is possible in... Read More

Buying a Home when Rates go Up

Many people fret the rising tide of interest rates. You'll... Read More

Jumbo Mortgage Loans - Getting Approved for a Jumbo Mortgage Loan Online

Getting approved for a jumbo mortgage loan online is similar... Read More

Adjustable vs Fixed Rate Mortgages

Mortgage rates can either be fixed for the duration of... Read More

Using a Home Mortgage Calculator

There are a variety of tools online that you can... Read More

Shopping for A Mortgage? Do Your Homework First

If you happen to be shopping around for a mortgage,... Read More

Real Estate Tip: Escrow Accounts -- Do You Really Need Them?

If you have a mortgage on your property, whether it's... Read More

Guide to Interest Only Mortgages

Here is a useful guide to interest only mortgages. An... Read More

What is an Offset Mortgage?

An offset mortgage is very similar to a current account... Read More