A type of loan that can be applied against the total equity in your real estate is called a reverse mortgage. To increase their income, this type of equity is withdrawn and paid to the owner of the property in a large sum or in monthly installments. This mortgage is commonly issued by the Housing and Urban Development through the Federal Housing Administration. This reverse mortgage is given the name of Home Equity Conversion Mortgage. Unless the homeowners no longer live in that property or they fail to pay for the home insurance or property taxes, they don’t have to repay the reverse mortgage.
In order to get the reverse mortgage, the property owners must have agreeable equity position in their main residence and they have to be at least sixty-two years old. This includes any property approved by the Federal Housing Administration. These homeowners also have to complete counseling with a reverse mortgage counselor approved by the Housing and Urban Development. If the homeowner does not move out of the property he is not required to repay the mortgage. So, the mortgage will only be due if the property owner does not maintain residence for a year.
The homeowners do not have to pay the monthly installments if they retain ownership of their home. Furthermore, the homeowners cannot be held responsible if the value of the house decreases because this type of mortgage has a non-recourse provision. This means that both the lender and the Housing and Urban Development share the risk of the future house value.