To give a little history, the Reverse mortgage was launched by the US Department of Housing and Urban Development, in the year 1990.
A reverse mortgage refers to a type of loan available to qualified homeowners 62 years old & up, who are willing to convert their home’s equity into cash. This is a great financial solution for retirees. This type of financing is usually tax-free as well.
The homeowner retains full entitlement of the property against which the loan amount is borrowed. The Homeowner is still responsible for clearing property taxes, and other utility bills, as well as the property maintenance costs.
If an applicant meets the minimum requirements for the reverse mortgage, there are three different disbursement options, which are: receiving a lump sum, opting for the line of credit, or monthly repayment plans.
The total loan amount is due when the borrower of the reverse mortgage has passed away, or stopped living in the home for 12 or more months, or has opted to sell the property. If any of those circumstances end up happening, the homeowner is expected to pay back the loan. There are some alternative solutions if you wish to get rid of your Reverse Mortgage at any point. One can sell the property or refinance through different Utah housing loan types.
The advantage of taking the Reverse mortgage financing is that, so long as the homeowner continually meets the requirements, no monthly repayments will have to be made.
So, how much can a loan applicant qualify for?
The homeowner’s age determines the amount they can borrow. The amount of home equity they have available and your current interest rate can affect this as well. Note that you are not allowed to use more than 80% of the total home equity.