Why is a Reverse better than Traditional Loan

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Why is a Reverse better than Traditional Loan

Post  Lizzy B on Thu Feb 07, 2008 12:16 pm

I know alot of people that get a Traditional Loan, what are the advantages of a reverse loan over a traditional.

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Re: Why is a Reverse better than Traditional Loan

Post  Sun Shine on Fri Feb 08, 2008 1:39 pm

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

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