According to formal definition a reverse mortgage or home equity conversion mortgage (HECM) is a type of home loan for older homeowners that require no monthly mortgage payments. Borrowers are still responsible for property taxes as well as homeowner’s insurance. Reverse mortgage allow holders to access the home equity they have built up in their homes now and defer payment of the loan until they die, sell as well as move out of the same property. Since there are no requirements of payment in terms of reverse mortgage, the interest is added to the loan balance each month. Eventually the rising loan value will be exceeding the actual value of the home, particularly in times of declining home values or of the borrower continues to live in the same property for many years. However, the borrower is generally not required to repay any additional loan balance in excess of the value of the home.
Few Important Terms Related To Reverse Mortgage
First of all reverse mortgage is available is available for senior citizens only. Hence any property owner whose age is more than that of 60 years of age is eligible for reverse mortgage procedures. If the wife of the applicant is going to hold the re-applicant position then she needs to be above 58 years of age.
The maximum loan limit is up to the 60% of the total value of the property subjected to maximum loan value of 50 lacs.
The maximum period of property mortgage is 15 years. The minimum tenure will be 10 years. Some of the banks may offer more than that of the above mentioned period.
Reverse mortgage rates vary depending upon the market conditions. Also it depends upon whether the borrower has chosen fixed or floating rate of interest.
An individual can be able to repay the loan value along with the interest any time during the loan tenure. There is no pre payment penalty.
Application Procedure Of Reverse Mortgage
- Before taking the decision think thoroughly.
- Then after taking the decision go to the nearest branch of the bank, who provides reverse mortgage.
- Then fill up the application form accordingly as well as carefully.
- Need to provide the details about the financial details like about the property, your legal heirs.
- Need to show the proof of ownership.
- Show the property related papers and a proof that the house where you are residing is truly yours.
Need more information about such refer https://www.reversemortgagepros.ca/reverse-mortgage/ .