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- Location of the home and…
- Value of the home at the time you applied
In this kind of loan the age factor usually has effect of how much you
will get, so the older you are will lead to more home value, and lower interest rate. All that
translates to more amount of loan you can get.
Like I mentioned in the previous article that reverse mortgage information
is fairly new comparing to the traditional mortgage loans and some of its points go against what we
have learned and believed in so if I were you I would read this article and the other one just to
make sure you are grasping the idea.
And don’t forget that federal and private lenders do offer free
consultations before committing to any thing.
It is know that the Home Equity Conversion Mortgage program which is
federally insured provides one of the best deals for many of the home owners so maybe you should
have them as one option so you can have a better negotiating position with other lenders and see
who can give you the best deal.
How do you get paid?
The lenders can offer you several options to get your loan. One option is
receiving the whole amount of loan as one payment where they will transfer the money to your
account and you are done from the first day of your approval.
The next option is a line of credit to withdraw cash when you need to. The
other option is you agree with lender to receive monthly installments for specific number of years
while you are living in your house. So for example, if you decided to receive monthly
payments for the next 4 years then make sure you will be staying in the
house for another 4 years. Or you can purchase a life-time annuity loan (fixed or variable) which
can free you from living only in your house.
A word or two about line of Credit
The amount of money you receive from the bank will depend on your Line of
credit that you will have. And there is also two line of credit types, flat and growing. A flat
line of credit means that if you were granted $80,000 and spend $20,000 then you would have left
$50,000 in you flat line of credit account.
But with the growing line of credit if you spend $20,000 and the remaining of $50,000 will increase
because of the growth factor. The growth factor, which is equal to roughly the interest that you're
being charged, takes into consideration that your home has appreciated in value over the past 12
months which is one year older.
So the growing line of credit gives you more than the flat credit of line.
Not every lender will give you the two options to choose from, for example, Fannie Mae is known
with providing only flat credit of line, and however, the Home Equity Conversion Mortgage program
provides a flat and growing credit of lines. Most private lenders provide the two options but with
different terms.
Few More Points about Reverse Mortgage
Information
- One unique feature about reverse mortgage is you won’t owe more than the
value of the house.
- Reverse mortgage lenders can not go after any thing
else than your house and sometimes it is called non-recourse loan.
- Whom ever going to inherit your house and wants to sell
it then what ever the value of the house will be paid off to the lender. Depending on the
value of the house, this can be either risky or profitable for the lender.
- With reverse mortgage loan you can not be forced out of
your house as well as not owing the back more than what your house is worth.
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