What is a reverse mortgage?
A reverse mortgage is a mortgage loan for people over 65 by which a bank pays a higher monthly change it to use your home as security person amount. The amount they pay the bank depends on the value of the house and the age of the customer. The higher the value and increases with age can receive monthly amount.
- Reverse mortgage can help older people to have more cash in their retirement years.
- You must have a property of some value, possibly in a provincial capital.
- The heirs do not lose ownership, although they will have to deal with the debt generated.
The mortgage is one of the best known financial products. it is very important to have a place to live instrument.
But the mortgage is also a product that is able to turn it around, and it is the bank to pay the user. It is a much less common than traditional mortgage and intended for a specific audience choice: the biggest.
Mortgage but charging
The product is intended for seniors who have a home or other real estate. It works like any other mortgage, generating a debt with a bank backed by a property, but in reverse. The user, instead of receiving a large sum of money at once to buy a house, the bank receives an agreed fee each month, and will gradually generating a debt to the bank.
The fate of this debt is to be liquidated when borrowers die . Thus, they receive mortgage dealers is an annuity. After his death, the heirs are those who have to deal with the debt that has been incurred.
If interested in reverse mortgage need immediate cash for any expense, banks often initially allow further disposal. This amount would be added to that were generating monthly installments thereafter.
Thus, the reverse mortgage can also be used for older people to cope with an unexpected expense or a large purchase or disbursement for which originally had no liquidity.
The property valuation is in principle the only expense that is faced by applying a reverse mortgage. And the other expenses associated with signing a mortgage, such as origination fees, amortization subrogation or not They entitled.
The expenses generated by the assessment are usually not too high . Furthermore, most of the time applicants have to pay either in personnel, but are usually added as additional provision to the mortgage.
The profiles most likely to seek reverse mortgages are those that correspond to older people over 65, who have owned a home and want to have more cash each month.
Furthermore, among these, they are the best candidates who have homes value and heirs. And it is that the descendants will have to cope with a debt after the death of the owners of the mortgage, but not lost, in principle, home ownership.
The age of applicants is one of the most important elements when calculating the monthly fee you receive by way of reverse mortgage. The older they are, the higher also this amount, since it is understood that their life expectancy is lower. In fact, according to one industry experts, Best Senior,the average age of contracting this product is around 80 years.
Housing is another crucial factor when calculating the amount to be received each month. When higher the value of this, of course can also be higher quota . The houses are located in provincial capitals, as they are easier to place in the housing market especially valued. Many banks do not accept housing that does not have a rating of at least 200,000 euros.
The heirs are the other party affected by a reverse mortgage. Upon the death of the holders of the mortgage and housing owners, the heirs are composed with a debt quota holders who have received more established interests and management fees .
They are thus heirs who ultimately assume responsibility for maintaining the beneficiaries of the mortgage. However, unlike what happens with other similar product, the annuity real estate , do not lose ownership of the property.
At the time of death, the bank allowed a period (ranging from 6 to 12 months) to carry the debt. At that time, the heirs have several options. They can pay, if the amount available, the total liability has been incurred. In case you do not have that money (or not you want to spend), they can also request other than mortgage to repay the debt.
Among their options is also to renounce the inheritance if they want to take over the debts. Or accepting the benefit of inventory, which means they would have to sell the property and the amount obtained cope with the debt owed to the bank.
But the fact that there are several banks and financial institutions that offer this product means that not all reverse mortgages are the same Each company offers different conditions : interest rates, valuation of housing or finance amounts.