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Reverse Mortgage Basics
from:Many consumers can benefit from an introduction to the reverse mortgage. This advance is a type of loan that allows a homeowner to borrow from their home’s value. The reverse mortgage has many interesting aspects to it for some homeowners to consider.
The borrower does not have to pay back any of the money that he uses in the course of the reverse mortgage. The package is designed for retired homeowners who need money but do not want to sell their current residence. Instead of selling, the customer simply borrows money against the value of the home.
The debt is to be repaid when the home is sold or in the event of the borrower’s death. Many elderly clients can benefit from this type of advance because they do not have to worry about repaying the debt. The money owed is simply taken out of the sale price when the home is sold.
But what if the borrower dies? The individual that inherits the home also inherits the debt. This is typically little trouble considering that the value of the home should greatly exceed the cost of paying off the debt. The loan company will work with the person that inherits the property to work out a viable agreement.
There is little risk of owing more than the home is worth. The lender accounts for the initial mortgage amount and the lender figures in the interest rate. The length of the loan and the home’s appreciation are also factored into the agreement. The amount of the money lent will not exceed the value of the home through the term of the loan.
Basic Requirements
A person will be typically unable to get a reverse mortgage if there is a lien on the property. In some cases, the borrower can use money that he receives in the loan to pay off any liens against the house. The lender will require that the lien be paid in full before making an agreement or the consumer will be required to pay the lien using monies from the loan.
The amount of the loan depends on a few factors. The home should be appraised and any necessary repairs must be made. The property’s location is another important component in the lending process. Well sought-after properties will yield more worth.
The interest rate will have an effect on the monthly installment and the overall cost of the loan. The borrower’s age is also a consideration. The reverse mortgage is designed for senior citizens. The older the borrower is, the more money he can receive through the loan.
The consumer has a few choices when it comes to the distribution of funds. He can opt for a lump sum, monthly installments or a line of credit through the reverse mortgage.
Mortgage Bankruptcy News
Ally hopes to end mortgage woes with ResCap bankruptcy
NEW YORK (Reuters) - Ally Financial Inc's mortgage unit on Monday filed for bankruptcy and the auto lender said it will sell some international operations to help set it on a path to repaying $12 billion (7 billion pounds) in bailout money. Ally's mortgage unit, called Residential Capital, or ResCap, filed for bankruptcy protection in federal court in Manhattan under a plan that has the support ...
Read more...Ally Financial's mortgage unit nears bankruptcy: sources
NEW YORK (Reuters) - Ally Financial Inc's Residential Capital unit is nearing a bankruptcy filing, sources familiar with the situation said on Sunday, in a move that could help the taxpayer-owned auto lender to shed its troubled mortgage business but also spur drawn-out legal fights. The board of ResCap is scheduled to meet later on Sunday and a pre-arranged bankruptcy filing, where Ally has the ...
Read more...US-owned Ally's mortgage unit files bankruptcy
Troubled US Treasury-owned lender Ally Financial said Monday its was placing its mortgage unit into bankruptcy protection as the government seeks to reduce loss risks from a major $17 billion crisis-era bailout.
Read more...Ally Financial's mortgage unit files for bankruptcy
Ally Financial Inc's mortgage unit on Monday filed for bankruptcy and the auto lender said it will sell some international operations to help it get on a path to repaying US$12-billion in bailout money
Read more...UPDATE 1-Ally hopes to end mortgage woes with ResCap bankruptcy
(Adds company, filing details, background, bylines) * ResCap files for bankruptcy in Manhattan court * Fortress puts $2.4 bln opening bid for ResCap assets * Ally plans to sell international businesses ...
Read more...