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Advantages and disadvantages of reverse mortgage

"Reverse mortgage", is developed on the basis of the U.S. credit scheme, allowing you to quickly convert property into cash without loss of housing rights.

In most of countries, such mortgage is designed, first and foremost, on the elderly pensioners with low income and which have some real estate. As a result, to ensure the normal life they have no other option but to sell their homes. However, the main advantage of the reverse mortgage is the fact that it will help to turn an apartment or house in real money, and the borrower will have the right to stay in this property.

Other words, the owner of real estate deposits his apartment and receives for it a certain amount. It is these benefits and will form the principal amount of client debt. Interests, charged on the mortgage, will be added to the principal, so to repay a loan is not required. Upon the occurrence of a predetermined event the lender will foreclose on the mortgage and, thus, out of the proceeds to repay the loan. These events usually attributed death of the landlord or his move to a nursing home.

This scheme can be compared with the right of life use of housing on the basis of the contract of personnel rent. This type of mortgage is important for borrowers who have low income and do not have relatives who can help financially.

However, the reverse mortgage is not devoid of drawbacks, about which you can get to know at reversemortgagelendersdirect.com. This loan is attractive at first glance, has absolutely nothing to do with actions, aimed at improving the living conditions of citizens. In this case, it is only that the officials, who are unable to provide a low-income category of people, try by all means to pass on their shoulders through the issue of alienation of property on account of material support, received from the banking institutions.

According to experts, reverse mortgage is like rent. Using mortgage of this property, the owner gives shelter in exchange for monthly payments, for example, 5 - 10 years. Accordingly, the property is transferred to the bank only after the death of the owner. On this basis, the pensioner receives from the credit institution financial help, and the bank, in turn, alienated housing.

Monthly payments depend on the actual purchase price, terms, and the bank does not care about the income of the owner in this case. The property is sold to the state structure or a bank. Upon completion of processing of transaction or after the full repayment of the cost of housing, it goes directly to the payer, i.e to the bank.