Amount Of Loan Capital Vs Home Value

The equity or value of the property or residence in reverse mortgage transactions is where the loan is taken against. Securing the property with mortgage insurance is likewise a legal requirement. Therefore, there are simply no bases on the possibilities that other assets are going to be confiscated in order to pay for the loan.

The bank will get the borrower's house

Basically, reverse mortgage is not that different from regular types of mortgages. Property ownership will not transfer from the borrower to the lender.

Banks can sell the loan and alter the mortgage agreement

That is another reverse mortgage myth. This is because the borrower will have to sign a legally binding document, which stipulates among others that no modification on the terms of the mortgage is allowed.

The Heirs Of The Borrower Could Be Force To Pay

Wrong once more because it will be the money realized from the sale of the house that will be used to repay the mortgage and other expenses in case the borrower left the home permanently or has died. In case the money collected from the sale will be inadequate, the mortgage insurance will cover the rest.

Social Payments Will Be Affected By The Loan

The fact is, there will be no effect on the social payments that people gets in case they avail of reverse mortgage loans. Given that not all states have the same policies when it comes to this subject, reverse mortgage applicants should be aware of the specific laws applicable in their home place.

Health Requirements Make It Difficult To Qualify For This Mortgage

One of the common and amusing reverse mortgage myths given the fact that there are no health requirements actually. For a person to qualify for a reverse mortgage, he or she must be 62 years old at least, owns his residence, and have equity left on his or her home.

How Much A Borrower Earns And Credit Score Are Important

Another myth because credit scores and capacity to pay are not part of the factors being considered. The basic principle in this loan transaction is to convert into cash the house equity.

The Borrower Should Be Debt Free

Actually, reverse mortgage can be used to pay up existing mortgage that the borrower has at the moment. In due course, the lender will be able to recoup the loan by the terms of the reverse mortgage contract.

Reverse Mortgage Is Suitable Only For People Who Are In Serious Need Of Money

Such assumption is false since reverse mortgage is intended to be an alternative source of money that can be used in case unexpected expenses arise like medical or medicine costs. For more details about who qualifies for a reverse mortgage, follow the link.