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Reverse Mortgage

A reverse mortgage is a mortgage against your home that you are not required to pay back as long as you are living there.

With a regular mortgage, you borrow money from a lender and pay that lender back on a monthly basis. As you pay your lender back on a monthly basis, your debt begins to decrease.

The exact opposite happens with a reverse mortgage, hence the term “reverse mortgage.”

With a reverse mortgage, a lender pays you on a monthly basis. Of course you must have enough equity in your home for this to occur.

The monthly payment from the lender to the borrower is determined on the value of the home over a thirty or twenty-year term, the same way a regular mortgage would be.

The majority of people who apply for and obtain reverse mortgages are older people who have lived in their homes for many years who have acquired enough equity to make it worth their while. Using the money to supplement their retirement income.

When it comes time to pay back the loan, the equity from the sale, or refinance of the home is used to pay the lender.

The reverse mortgage is not a very popular one today because it is still relatively new to the market and there is still a lot of misunderstanding about them.

As pointed out earlier, the majority of people with reverse mortgages are retired seniors with low to moderate income who need to use the equity of their homes to survive.

My own personal opinion is that reverse mortgages will grow in popularity as people continue to live longer.

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