When you take a reverse mortgage loan you will never get more than the home value. This is irrelevant of the amount that you have borrowed. If the balance amount is less than the home value at the repayment time then you or your nominee can keep the remaining amount.
How much is the loan amount that you get on a taking a reverse mortgage loan?
There are many factors that will determine the amount of loan that you will get through a reverse mortgage.
- Age of the borrower. This is calculated as per the age of the spouse who is the youngest in the couple applying for the loan
- The home value
- Interest rate
In order to be eligible for a reverse mortgage loan, you should be eligible to take the loan and must have a home or had a very low mortgage amount to be paid off. The home should also be your primary residence.
The laws have tightened the amount that you can borrow but if you are older and the value of your house is high then you will be eligible for more loans. You can, however, use the loan the way you want to.
The method by which the payment is collected depends on the mortgage type. There is an option to get the amount as a lump sum or as a fixed payment monthly. One can also apply for a line of credit payment method.
The advantages of taking a reverse mortgage
- the borrower does not have to do any monthly payments
- the loan amount can be used to pay off any debts or to settle any of the unexpected expenses
- the money can be used to pay off any mortgage that is already existing
- the loan can be used to increase the monthly disposable income
Things that you should be aware of before applying for a reverse mortgage loan
- The cost and the fees for taking the loan could be high
- The borrower should maintain the house and pay the taxes on time
- The reverse mortgage may not let one keep the house for his future generations
When should you not apply for a reverse mortgage loan?
You should not take a loan through reverse mortgage if you cannot take care of the maintenance cost and other expenses of the house, check this out.
In the case of your death or in case you do not stay in the house for more than 12 months then the loan becomes due. This means you or the state would have to repay the loan amount or sell the house to settle the loan.