A reverse mortgage is a type of home equity loan that was specifically designed for elderly homeowners. It’s a mortgage that allows the homeowner to borrow money against the value of their home. This type of loan does not require monthly mortgage payments and is typically repaid after the borrower moves out or becomes deceased.
If you’re a senior citizen living in the United States and looking for a way to plan for emergency expenses, improve your quality of life, or reduce debt, you’ve come to the right place. This loan option allows senior citizens the option of accessing a portion of their home equity without having to move or make monthly mortgage payments.
To be eligible for a reverse mortgage, you must remain in your home, as your primary residence, and be able to afford the costs of owning and maintaining the home. Those costs generally include insurance, taxes, and general home up-keep. Borrowers must be at least 62 years of age or older to qualify for a reverse mortgage.
A reverse mortgage works by allowing borrowers to use the equity in their home now without having to move or sell their home. The bank makes payments to the borrower based on a percentage of the accumulated home equity. Depending on a fixed-rate or adjustable-rate mortgage, you can receive the funds as a lump sum, fixed monthly payment, line of credit, or a combination of those options.
One of the most important features of a reverse mortgage is to understand that the borrower will owe more over time since the amount owed grows as the interest on the loan grows. The money paid to the borrower can be used in almost any way imaginable, but it’s typically used to pay off debt or improve monthly cash flow.
Home Equity Conversion Mortgage (HECM)
Single Purpose Reverse Mortgage
Proprietary Reverse Mortgage