Credit cards Business credit cards Auto Loans Home Loans Auto insurance



Reverse mortgage

What is a reverse mortgage loan?

Reverse mortgage is a new phenomenon, AEMLR (an agency engaged in mortgage loan restructuring) is distributed among retirees and implies a pledge of real estate with subsequent sale. The emergence of such a credit product is due to the low standard of living of pensioners.



For elderly citizens who do not have financial support from relatives, this option of mortgage lending can be a good help.

Reverse mortgage is designed for senior citizens, when a life loan is issued on the security of residential real estate. It is very important that with such crediting the rights of property of citizens on their housing remain.

After the death of an elderly person, the lender offers real estate for sale. Realization of the property compensates the debt to the financial institution with interest accrued on it, and the balance is returned to relatives.

If relatives wish to inherit, the bank will not sell real estate.

In this case, the heirs will have to pay the lender the entire debt, together with the accrued interest, and only after that they will be able to formalize the ownership of the housing of the deceased relative. This option is convenient for the bank - you do not have to engage in the sale of an apartment.



Features of the conclusion of the reverse mortgage

The age of a candidate for a loan should be as close as possible to 65 years. If the property is owned by more than one person, then the pensioner who is younger is taken into account.

The potential borrower should not have incapable heirs and dependents on the maintenance, because the law will not allow real estate to be sold to the bank.

A loan can only be issued for an apartment located in a large settlement, since it is possible to make a forecast regarding the sale of this property more realistically.

The apartment should not be seized. It should not be in disrepair. Be sure to have water and electricity.


Is reverse mortgage different from rent?

In case of reverse mortgage lending, the bank is interested in the longest possible life of its client. Why? Because in this case, the credit institution receives the highest profit - the longer the elderly borrower uses the credit funds, the greater the amount of interest will be charged on the loan body.

In case of a reverse mortgage, the pensioner has the right to terminate the loan agreement at any time by repaying the loan.

Reverse mortgage

What problems may arise?

To date, this program is not endowed with a clear sequence, it is not always possible to legally prove the correctness of a lender or borrower.

With this type of lending, a problem for a bank can be relatives who wish to solve their financial problems with low interest rates.

It is not excluded the eviction of the debtor. Although the loan is a lifelong loan, if a client has a huge debt in front of housing and public utilities, a credit institution may terminate the loan agreement and demand early repayment of the loan. If the borrower is unable to do this, then the property is put up for auction.

Another major drawback. When making a reverse mortgage, you need to make an assessment of housing, pay for insurance and various commissions. All this is done at the expense of the potential borrower, which leads to an increase in interest.


Sun, 09 Dec 2018 16:35 GMTActor Edward Norton is trying to change how the TV industry measures viewershipSun, 09 Dec 2018 15:58 GMTA wintry storm hammering the Southeast grounds more than 1,400 flights, as airlines waive change feesSun, 09 Dec 2018 15:13 GMTGoogle has huge plans for its home city — here's a look at the massive development Sat, 08 Dec 2018 19:00 GMTFord and VW considering an expansive alliance likely to echo across the global auto industrySat, 08 Dec 2018 00:41 GMTCramer Remix: The trade war isn't about trade—it's about global dominationFri, 07 Dec 2018 23:46 GMTCramer's lightning round: There are better drug stocks to own than GlaxoSmithKlineFri, 07 Dec 2018 23:28 GMTCramer: Buy shares in cloud plays Salesforce, Splunk, VMware, Workday on downturnsFri, 07 Dec 2018 23:13 GMTIf the Fed doesn't raise rates this month, the market could panic, Cramer saysFri, 07 Dec 2018 23:13 GMTCramer's game plan: Between the Fed, China and Apple, get ready for more volatilityFri, 07 Dec 2018 21:50 GMTCitigroup needs to slash bonuses, do 'whatever it takes' to cut costs: Wells Fargo analystFri, 07 Dec 2018 21:44 GMTT. Rowe Price's Ellenbogen says public market woes aren't yet punishing tech start-upsFri, 07 Dec 2018 21:22 GMTMexican auto exports to US keep surging as Americans clamor for trucks and SUVsFri, 07 Dec 2018 21:13 GMTApple buys Platoon, a start-up that helps indie musicians get discoveredFri, 07 Dec 2018 21:03 GMTApple and Alphabet erase their gains for the yearFri, 07 Dec 2018 20:40 GMTThe ultimate holiday tipping guide: How much to giveFri, 07 Dec 2018 19:49 GMTUS mall owners have been slow to change for years. But now they're trying to embrace itFri, 07 Dec 2018 18:46 GMTChina launches lunar rover in historic mission to the dark side of the moonFri, 07 Dec 2018 18:35 GMTTop VC deals: Walmart buys Art.com; Steph Curry backs travel AI; Salesforce launches Japan fundFri, 07 Dec 2018 18:04 GMTCoca-Cola's chairman thinks we should change how we talk about soda salesFri, 07 Dec 2018 17:53 GMTDelta Air Lines starts offering bare-bones basic economy award tickets to frequent flyersFri, 07 Dec 2018 17:29 GMTCoca-Cola chairman: 'More unknowns, more volatility' are making running a global business tougherFri, 07 Dec 2018 17:25 GMTGE makes it official, lowers dividend to a pennyFri, 07 Dec 2018 16:02 GMTSenator slams Google's censored search engine work in China Fri, 07 Dec 2018 15:34 GMTAltria shutters its e-cigarette brands as it eyes Juul, awaits iQOS decisionFri, 07 Dec 2018 15:30 GMTHere's the one photo the Walmart CEO keeps on his phone to stoke 'healthy paranoia' Fri, 07 Dec 2018 15:27 GMTThe 10 most-liked companies in Germany to work for in 2019, according to GlassdoorFri, 07 Dec 2018 15:18 GMTMicrosoft's cloud business could be bigger than Windows by 2021, KeyBanc saysFri, 07 Dec 2018 13:32 GMTAmazon will start penalizing sellers who ship unsafe packages to its warehouses as violations mountFri, 07 Dec 2018 13:14 GMTMorgan Stanley joins the chorus of Apple price target cuts: 'China smartphone market to blame'Fri, 07 Dec 2018 13:09 GMTBond markets are flashing red and an oil plunge could only make things worse