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The Reverse Mortgage - An Alternative Way To Use Your Home Equity
Category: Home Based BusinessHome equity, simply put, is the difference between the mortgage owed on a home and the property’s market value. Equity increases as the mortgage is paid off, and/or as the property itself gains value through appreciation. A homeowner can use the equity in his or her home as collateral for loans or lines of credit. Many people find such loans useful in the case of financial need or emergency.
Recently, a new way to take advantage of value stored in home equity has become increasingly popular - the reverse mortgage. As the name implies, a reverse mortgage is very similar to a traditional mortgage, except that the cash flow is reversed, i.e., the lender pays you, instead of the other way around.
A reverse mortgage carries several advantages. First, unlike a typical home equity loan, you are not required to make monthly mortgage payments. In fact, repayment for the reverse mortgage loan is not due until you no longer use the property as your principal residence. Second, a reverse mortgage loan will not lead to foreclosure on your home due to missed payments - no small benefit, as any homeowner knows. Thirdly, unlike a traditional home equity loan, you do not have to meet any income-to-debt ratios in order to qualify for a reverse mortgage.
Of course, there are certain restrictions on reverse mortgage loans. To begin with, this type of loan is designed for use by the elderly, and is restricted to senior citizens age 62 and older. In most cases, you must have total ownership of your house or owe very little on your mortgage. This is usually not a problem for a conscientious homeowner. Finally, your house or residence itself must qualify for a reverse mortgage loan. Eligible types of residence include: single-family homes, townhouses, detached homes, certain condominiums, and even 2-4 unit properties that you both own and occupy.
Several factors influence how much money you are eligible to borrow with a reverse mortgage. The most obvious factor is the current market value of your home - the greater it is, the more borrowing power you have. The current interest rate also has an impact. In general, an interest rate which is lower will increase the amount of money you can borrow. A final factor is age. Because reverse mortgages are intended for senior citizens, the older you are, typically, the more money you can borrow with a reverse mortgage.
For more information about using home equity to your advantage, making home purchases, and Texas mortgage loans, check out the resources provided at http://www.texasmortgagerefinanceloans.com
Joseph Devine
Tags: texas home equity loans, texas mortgage, texas mortgage refinance loans, texas mortgage refinancing