Reverse Mortgage: Is It a Good Option?
After you have lived in a home for many years, you have the opportunity to utilize your home's equity to fund other purchases. You may want to pay for school tuition, renovations, or even a new vehicle. If you are a qualified homeowner, you may have the opportunity to get a reverse home mortgage to use your equity. The following is some helpful information about reverse mortgages:
Reverse Mortgage Defined
A reverse mortgage is a specialized loan that allows you to turn your home's equity into a liquid asset. This arrangement is different than a standard home equity loan. The primary difference is that you will not be required to repay the money you borrow against the home equity until you are no longer living in your home. Home equity loans will need to be repaid as soon as you initiate the transaction. However, you will still have to pay for your insurance and taxes.
The Home as an Inheritance
One major concern many have about reverse home mortgages is whether or not the home can be included as a part of an inheritance in your estate. If you sell the home or are no longer using it as your primary residence, the loan will mature and the money borrowed will need to be repaid. This will include any finance charges and interest. If you sell the house, any money left over after the sale will be belong to the estate and can be passed to the beneficiaries. No debt will be placed into the estate.
Cancelling a Reverse Home Mortgage
There may be a chance that once you get into the loan, you may decide that you do not want to go through with it for whatever reason. According to federal law, you will have a certain amount of days to change your mind and cancel the process. This is called a right of rescission. This information will be included in your loan paperwork. Many lenders will approach the cancellation process differently, so you will need to have all of their contact information along with a copy of their policy when you sign your loan agreement. If you have an issue with cancelling the loan within the given time frame, you can contact a real estate attorney to help you.
Getting a reverse mortgage is a major financial step. It is very important that you understand the process, your rights, and the legalities of the transaction.