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.
ARM
Loans
Fixed
Rate vs. Variable Rate Mortgages
Interest
Only Loans
Mortgage
Closing Costs
Mortgage
Insurance (PMI)
Considering
a Mortgage Refinance
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