What is a reverse mortgage financial assessment?
Reverse mortgage financial assessment is an actual review of your financial position. This may include a check on your credit history, any sorts of debts employment history or income during the loan process. This policy became effective in the year 2015. This was due to the fact that most of the borrowers were financial unstable and could not pay even their taxes therefore end up losing their homes and this would end up with the lenders filling for insurance claims which led to much hurdles and stress to the lenders as well as the federal housing administration of the U.S. Therefore, they found it important to do a financial assessment review before giving out or starting on the reverse mortgage process for any borrower.
How does the reverse montage financial assessment run?
Unlike other mortgages, for reverse mortgage the borrowing ability is not hell bent on the borrower’s income ability or credit ability. This product is highly put forward for seniors who might not be in employment anymore, are maybe having issues accessing or have limited income from social security., pension receives, sometimes an employment sponsored retirement fund or an individual retirement account. This plan is highly put or given in consideration to a person’s age, home value and the interest rate for this loan.
What is the purpose of reverse mortgage financial assessment?
The purpose of the financial assessment is to make sure that the borrower is current on their bills payment as well as tax. It also makes sure that the lender has no incurring debts. However, this finding doesn’t stop the lender from approving the mortgage plan. This is because no borrower is required to pay in monthly installments, but rather they would receive money in monthly installments or any other payment or cash receive method of their liking. If, however the assessment shows any kind of problem the borrower is required to take up damage recovery options. This includes setting up a life expectancy set aside in some kind of account.
This account is called an escrow account. An escrow account is a type of account where the asset is held by a third party. This is where they hold your funds until the required instructions are given out. Therefore, the lenders have authority to give out instruction over the said funds in that account. The account will be funded from the borrower’s reverse mortgage money that will enable them clear off their taxes frequently, insurance and any other required charges surrounding the house expenses. Which will include the mortgage service fees for the duration of the loan.
The good thing about this kind of loan is the fact that you get to pick out on you receive method options. If you want it at one go or if you feel like you might overspend and want it in monthly installments or maybe over a certain period of time or maybe over a line of credit. It’s up to you to pick out. However, each method has its own kind of interest rate since some are fixed while others tend to fluctuate depending on the market.
Apart from the loaning process, the reverse mortgage financial assessment will enable you to know where you are at financially. You will also be able to pick out on underlying financial problems that have been affecting you without your knowledge. This may include accruing debt of bills and tax payment. Sometimes it may even help you strategies and plan on how to manage yourself financially. This is through coming up with techniques that will help you clear and pay your payments on time.
Before picking out on a reverse mortgage plan from any lender, do some research. Make sure the lender is FHA accredited. You wouldn’t want to find yourself in the middle of a scam and end up losing all you had earned assets. Make sure you pick out a plan that is in value to your home or below. Don’t try higher because sometimes it might end up affecting you. Lower saves you even in times of crises like when your home follows below market price due to fluctuations of market prices. However, this is a good plan to put you in set once you are of employment and want to start that dream business you have been wishing for.
