We often hear about the reverse mortgage plan from our friends, family or others. You may also have heard about it in television or in newspapers that there are many reverse mortgage companies available in the market nowadays. But despite all these, many of us are still have no idea what a reverse mortgage is all about and what are its benefits.
A reverse mortgage is basically for those people who are equal or more than 62 years of age. Through this process home-owners can get the loan as a line of credit or a lump from their home. And when they sell their home or pass away, this money will be paid automatically to their creditors.
The trend of reverse mortgage is now becoming so popular today. And the main reason behind this, is the reverse mortgage loan is not taxable and most importantly it does not affect on the social security of the home-owners. They can have their home as long as they want along with the title and they do not even need to make payments to their creditors. The loan is subject to reimbursement as long as the home-owner is dead or sold the house or permanently moved away elsewhere. It is totally different from a normal mortgage.
Types of reverse mortgages:
1. Reverse mortgages for a single purpose: This is offered by some non-profit organisations and state and local government agencies.
2. Reverse mortgages insured by the federal government: This is protected by (HUD) Department of Housing and Urban Development of the United States.
3. Proprietary of reverse mortgages: This service is provided by the companies that develop them. These are private loans.
This type of reverse mortgage loans are very cheap compared with other loans in the market. But the problem is, its not available everywhere. There are some terms and conditions to qualify for this reverse mortgage loan. Home-owners must have a low or moderate monthly income to qualify for a reverse mortgage loan.