Reverse Mortgage: Essentials to Know
A reverse mortgage in Palm desert uses your home equity for cash. Are you short on funds? Read on to find out if this is the right financial option for you.
How does it work?
Also known as a Home Equity Conversion Mortgage (HECM), this type of loan uses your home as collateral, The Balance says. Unlike a standard mortgage, though, you receive the money instead of sending money to your lender. Your loan will increase with each monthly payment you receive.
Do you qualify?
Before you shop around for a reverse mortgage in Palm desert, you need to qualify for the loan. Homeowners must be 62 years of age and older to apply for this. The home must also be your primary residence. If you have federal debts, you may not be qualified for the loan. Also, you must have enough funds to pay for your property taxes and hazard premiums.
When is the loan repaid?
When the borrower passes away or if you sell the home or move out of it permanently, then the loan will need to be paid back.
How much can you get?
The amount of money you receive through this loan product is determined by several factors. Your age, the value of your home, the interest rate you get and the lesser of the appraised value will all affect the amount of the proceeds.
What are the advantages?
With a reverse loan, you won’t have to make monthly payments. If you don’t have any heirs, you can make use of your home equity to improve your monthly cash flow. If you have a financial emergency, you can use this loan to settle unexpected expenses.
If you want to know more, look for local reverse mortgage options in your community. That’s a good place to start.