When it comes to shopping for real estate, be it looking at a home for sale in Georgetown Ontario or Spokane, you're going to come across a lot of real estate terms you've never heard of before. The world of real estate has its own lingo and a lot of the words used by those in the world of real estate such as Spokane or Toronto mortgage brokers, lawyers and real estate agents are words only they understand.
The rest of us who don't know everything there is to know about Spokane or Prince Edward Island real estate is left in the dark and pretending they know what a reverse mortgage or conveyancing is. You either have to ask someone such as your agent, lawyer or broker to explain something you don't understand or research real estate terms before you meet with them or keep reading this article.
Today we're going to focus our attention on reverse mortgages. A reverse mortgage is a mortgage loan that seniors aged 62 or over can apply for that's overseen by HUD. A reverse mortgage allows for senior aged homeowners to access a part of their equity that can be used for home improvements.
Talk to any mortgage brokers in Canada or the USA to describe to you a conventional mortgage and they'll tell you that as a homeowner you would borrow a certain amount of money and then pay it back monthly over time. A reverse mortgage doesn't work like that. The lender of a reverse mortgage provides homeowners with a loan that's not required to be paid back in monthly installments. What happens is that the accrued interest from the reverse mortgage is added to balance of the mortgage and the mortgage keeps growing.
A reverse mortgage doesn't have to be paid back until the homeowner dies, they move out of the home, breach any mortgage provisions such as failure to pay property taxes, or the home is sold.
In order to qualify for a reverse mortgage you need to be at least 62 years old and the real estate property you want to take a reverse mortgage out on must be your primary residence. The size of the reverse mortgage loan is based on age, home value and home location and can not go over $625,000.
One drawback of a reverse mortgage is the amount of fees you have to pay in order to get a reverse mortgage. You're looking at upwards of $8000 in the form of mortgage insurance, origination fee, title insurance, real estate appraisal and survey. However, if you can look past the fees and qualify for a reverse mortgage for your Spokane or Waterloo Ontario homes then you might want to apply for one. |