Reverse Mortgages
Reverse Mortgage is a type of home equity
loan that allows you to convert some of the
equity in your home into cash while you retain
home ownership. Reverse Mortgage works much like
traditional mortgages, only in reverse. Rather
than making a payment to your lender each month,
the lender pays you. Unlike conventional home
equity loans, most Reverse Mortgages do not
require any repayment of principal, interest, or
servicing fees for as long as you live in your
home. Funds obtained from an Reverse Mortgage
may be used for any purpose, including meeting
housing expenses such as taxes, insurance, fuel,
and maintenance costs.
To qualify for an Reverse Mortgage, you must
own your home. The Reverse Mortgage funds may be
paid to you in a lump sum, in monthly advances,
through a line-of-credit, or in a combination of
the three, depending on the type of Reverse
Mortgage and the lender. The amount you are
eligible to borrow generally is based on your
age, the equity in your home, and the interest
rate the lender is charging.
Because you retain title to your home with a
Reverse Mortgage, you also remain responsible
for taxes, repairs, and maintenance. Depending
on the plan you select, your Reverse Mortgage
becomes due with interest either when you
permanently move, sell your home, die, or reach
the end of the pre-selected loan term. The
lender does not take title to your home when you
die, but your heirs must pay off the loan. The
debt is usually repaid by refinancing the loan
into a forward mortgage (if the heirs are
eligible) or by using the proceeds from the sale
of your home.
