What Does Having No Payment Actually Mean to Me
as a Borrower? ............................................................................................................................................................................................................... The best benefit to you as a borrower with a reverse mortgage is that you will not have to make payments on your loan. Instead, wonder of wonders, you will be receiving payments – or possibly one lump sum payment, depending on the reverse mortgage plan that you choose.
The peace of mind that comes when you don’t have a monthly payment to worry about is a prize in itself, but with a reverse mortgage you add that to the sense of financial independence that comes from knowing that you still own your own home.
One of the best parts of a reverse mortgage is the ability to choose the type of payment(s) that you want to receive. You can choose one large payment or a series of monthly payments. You can choose smaller payments that last for your entire future lifespan or smaller payments that last for a specified number of months. You can opt for a line of credit that allows you to take the money you need in the amount you need whenever you decide it is prudent. You can even choose a payment plan that combines many of these features. Having no payment means that you have ultimate flexibility when it comes to your finances. As a matter of fact, you can even choose to change your payment plan during the course of your reverse mortgage for an incredibly low fee of only $20 with most reverse mortgage options.
What is so amazing about a reverse mortgage is that as long as you maintain your home and keep it as your primary residence, your mortgage does not require any type of repayment. It is only once you choose – or find that your circumstances force you – to no longer live in your home for 12 consecutive months that your reverse mortgage loan could come due. For most seniors, the reality is that their reverse mortgage does not come due in their lifetime and they can live out their lives in the peace and security of their own home.
The total amount that you as the homeowner are able to borrow with your reverse mortgage depends on your age, the current interest rate, loan fees, and the value that your home appraises at. There may also be reverse mortgage limits in your area which affect the total amount that you are eligible for. One reason to consider a HUD reverse mortgage is that there are no limitations on assets or income for borrowers.
The reverse mortgage program from HUD does collect funds from insurance premiums that are charged to the borrowers. The homeowners is charged an upfront insurance premium of two percent of the largest amount that they may borrow in addition to a .5 percent yearly premium. You may also have various fees and costs associated with your loan, but these can all be paid by the reverse mortgage itself, meaning that again you have no actual payments from your income associated with a reverse mortgage. All costs can be left to be settled up when the loan comes due, after you have finished enjoying the rest of your life living in your own home.
