(I) A reverse mortgage: home ownership as an ATM

27 June, 2010 No Comments

The reverse mortgage becomes a formula created for retirees supplement thier pensions, so that older homeowners may obtain some extra money by charging an annuity, in exchange for their home, without sacrificing ownership or use thereof.

The requirements of the law are:

• That the applicant and the beneficiaries are 65 or older or are suffering from severe dependence.
• That the property on which the mortgage is either the main residence.
• That the debtor of the loan amount available through any regular or unique.
• That the debt will only be payable by the creditor when dies last borrower.
• That the property was rated ans insured against damages.

With a reverse mortgage, homeowners can continue living in their home, without having to leave it, until their death. This assures that they will remain owner of the property.

When the owner of mortgage dies, his heirs may get the house, returning to the bank the payments it has made the mortgage more interest. It corresponds to the heirs liquidate the situation with the credit institution. In this case, the institution can not demand any compensation for the cancellation of the mortgage. Once they have paid and the heirs have released its load housing mortgage, can inherit it in the same way as any other good.

If the heirs do not want or can not cancel the mortgage, the institution may foreclose and collect the debts due more interest. But the agency may only collect the goods they have in the inheritance, without being able to collect anything from the personal capital of the heirs.

In this type of mortgage, the homeowner receives a periodical payments or a single payment for a maximum amount, which determines the percentage of the valuation at the time of the mortgage creation, and to reach that figure, they stop have income, but the debt continues to generate interest.