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

---

Mortgage Basics for First Time Home Buyers

Anyone planning to take out a mortgage for the first... Read More

Mortgage Terminology for the First Time Home Buyer

Buying a Home for the first time can be a... Read More

How to Save Money by Using an Independent Commercial Mortgage Broker

Being a creature of habit can cost you plenty when... Read More

Securing a Cheap Home Improvement Loan

Finding a cheap home improvement loan can be a challenge... Read More

Home Loans and Mortgages ? Time to Consolidate Loans?

Home equity loans and lines of credit are useful tools... Read More

Guide to Flexible Mortgages

Outlined below is a useful guide to flexible mortgages. Flexible... Read More

Kingsland Georgia Mortgage Company Information For Homebuyers Transferring to Kings Bay

If you are transferring to the Kings Bay Georgia Naval... Read More

Finding the Best Mortgage Lender Online

Finding the best mortgage lender online is simply a matter... Read More

Guide to Mortgages

A mortgage is a loan that is guaranteed by a... Read More

10 Things to Look for in a Home-Equity Line of Credit

If you are a homeowner, you've probably received offers to... Read More

Save Yourself from Homebuying Disasters

Whether you are a first time home buyer or a... Read More

Thought Fixed Rate Will Give You a Respite from the Perils of Variable Rates! Think Again

Slight increases in the interest rates raise your hackles. Tension... Read More

Say Yes to ISA Mortgages for a Convenient Mortgage Repayment

Customers who opt for an interest only mortgage, and feel... Read More

Interest-only Equity Loans Create Amazing Power and are Quite Easy to Get

The power of home equity and interest-only payments, provided from... Read More

How to Get the Best Mortgage

This is a guide on how to get the best... Read More

Bankruptcy and Buying a Home

Filing bankruptcy is a stressful time in a person's life.... Read More

Reverse Mortgage Maximization

Have your home's appreciation grow twice as fast.For Seniors over... Read More

Carolina Mortgage Loans

You're selling your home and are looking to relocate to... Read More

Refinance After Bankruptcy

Refinancing your mortgage after bankruptcy is actually the same as... Read More

Home Mortgage Loan Refinance ? Benefits To Refinancing Your House Online

Here are some of the benefits to doing your home... Read More

Is It Time To Buy A House?

At some point as you're writing out your rent check,... Read More

Home Equity Loans ? There?s Gold In That There House

To paraphrase an old familiar quote that goes "there's gold... Read More

Guide to Home Equity Loans

Here is a useful guide to home equity loans. A... Read More

Should You Get an Interest-only Home Mortgage?

Before you consider taking out an interest-only mortgage, you should... Read More

No Fee Mortgages Coming Soon

Buying a home, especially for the first time, can be... Read More

First Time Home Buyer Loans Made Easy

When it comes to firsttime home buyer loans, a little... Read More

First Time Buyers Fail To Shop Around

Almost two thirds of first time buyers accept the first... Read More

Secured Homeowners Loans ? In Case You Thought a Home is Worth Few Dollars

Money is like music, if managed well, produces a good... Read More

Home Equity Loan vs. 401(K) Loan -- Which Should You Choose

Home Equity Loan vs. 401(K) LoanYou've finally decided to add... Read More

Is an ARM Right For You?

Let's start by taking a look at 7 key elements... Read More

Homes, To B(uy) or Not to B(uy)

Whether you are just moving out on your own for... Read More

Home Equity Loan ? When Does Refinancing Make Sense?

For the last two years, interest rates have been much... Read More

Bad Credit Loans Authenticate What Is Positive About Bad Credit

This might not be the front page news but it... Read More