The magic of a reverse mortgage
Picture yourself in the following reverse mortgage example. You’ve been paying off your home loan faithfully for the past 30 years. You’re reaching a new age milestone, and it looks like it’s time to retire. The answer to your problems might come in the form of a reverse mortgage. A reverse mortgage simply means that the equity that you’ve built up over the years from making regular payments on your loan can now become converted into cash.
How to Obtain a Reverse Mortgage?
A special set of reverse mortgage guidelines should be followed when considering the application process involved in taking a reverse mortgage loan. They are as follows:
- Educate yourself: Contact a reverse mortgage professional in order to begin to understand how these types of loans work.
- Find counsel: Counselling services are mandatory when considering the possibility of a reverse mortgage, as they are required to help ensure your understanding of the process.
- Apply for your loan: Should you choose to proceed with your loan, you may apply with the lender of your choice.
- Wait for it to process: An underwriting process will take place, in which your eligibility will be assessed from a number of different factors. This generally takes 1-5 days.
- Close on your loan: If your application is approved, you may proceed with the acceptance and closing procedures of your reverse mortgage.
Please keep in mind that there are also a few specific requirements that must be met in order to actually be eligible for a reverse mortgage, such as being at least 62 years old. It is important to research these requirements before continuing to apply for your loan.
How the Reverse Mortgage Works?
Now that we understand how to apply for a reverse mortgage, let’s look more closely at how a reverse mortgage works. With this type of loan, a homeowner is essentially borrowing money against the value of their home. This allows them to use the extra funds for retirement or other purposes. The home serves as collateral, and must be sold to repay the mortgage after the borrower dies. Until that time, however, no mortgage repayment is required. While Bajaj Finserv does not have a reverse mortgage plan, they do have a Loans Against Property option available to those seeking additional funds.
Types of Reverse Mortgages
There are three basic types of reverse mortgages that are available to those interested. They are the single-purpose reverse mortgage, which only allows you to use the money acquired for one purpose, the federally-insured reverse mortgage, which is insured by the federal government, and the proprietary reverse mortgage, which can be used for high-value properties. Each of these options has specific requirements and is only offered by certain financial institutions, so research will be required before selecting the option that is right for you.
Problems Related to Reverse Mortgages
While this loan option looks fairly flawless, there are a few problems with reverse mortgages. If the property taxes are not paid regularly, the loan can go into default. It can also sometimes place unwanted stress on heirs who must pay off the remaining loan when the borrower dies. Finally, the amount of money a lender might be willing to disburse can be limited. It is important to consider all of these possibilities before pursuing this type of fund acquisition.
For those who might find themselves at the beginning of the home purchasing process, Bajaj Finserv has a low-interest Home Loan to consider.
Bajaj Finserv also allows potential borrowers the convenience of applying for their Loans online, allowing you to apply from the comfort of your own computer.