Conventional Mortgage vs Reverse Mortgage
How is a reverse mortgage different from obtaining a a traditional mortgage?
A conventional mortgage is used to purchase or refinance a property. The mortgage provider lends you the cash to buy or refinance the home. In exchange, you promise to repay the lender the money you financed, along with interest, over a number of years.
A reverse mortgage is generally used to get cash out of your property. Instead of borrowing to buy a home, you are borrowing against a house you currently own. This allows you to make use of the cash now for expenses, and repay the mortgage after you die or sell the home.
Reverse mortgages are designed for older property owners in city who want to gain access to their equity (the wealth residing in their homes). In order to get a reverse mortgage you need to be at least 62 years of age and have paid off the majority of, or all, of your mortgage loan.
Unlike conventional mortgages, reverse mortgage loans in Oregon do not require monthly home loan payments. The interest and costs on the loan are added to your loan balance each month. Gradually, your home equity will decline as your mortgage loan balance grows. It’s the reverse of a conventional mortgage.
For anybody who is interested in buying a new property (for instance, to downsize or relocate nearer to family in city), you can sometimes make use of a reverse mortgage for this. You’ll need to have a higher down payment compared to a traditional mortgage, however, you won’t have to make monthly home loan payments.
Tip: It’s your property. Recognize what you could be putting at stake. Before you borrow against your property, make sure you understand how the loan functions. A terrific way to determine if you understand the reverse mortgage would be to explain it to a friend in your own words.
Take care with regards to a reverse mortgage in Corvallis OR. There are several points to consider, including your age, your financial needs and goals, and the length of time you expect to remain in the home. When you decide it makes sense for you to get the reverse mortgage loan, learn about all of the fees and do a comparison of rates before signing anything.
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