A reverse mortgage is a type of home loan that allows homeowners aged 62 or older to utilize the equity in their home.
Instead of making monthly mortgage payments to the lender, the lender makes payments to the homeowner. The payments can be in a lump sum, a series of regular payments, or a line of credit, for example.
The loan balance increases over time as interest accrues and the lender adds fees to the loan.
The reverse mortgage is typically repaid when the homeowner sells their home or passes away. At that time, the loan balance, including interest and fees, must be paid off.
If there is any equity left in the home after the loan is repaid, it goes to the homeowner or their heirs.
It's important to note that reverse mortgages can be complex and have high fees, so it's important to carefully consider whether it's the right option for your financial situation.
Reverse mortgage borrowers are responsible for property maintenance.
The loan is due payable when the borrower no longer lives in the residence. Foreclosure may occur if the consumer (1) lives somewhere other than the home longer than allowed by the loan agreement; or (2) does not pay property taxes or insurance premiums. Consumers must make payments for taxes and insurance during the term of the reverse mortgage. A reverse mortgage may affect eligibility for some government programs, such as SSI (Social Security Income) and Medicaid. Please contact your mortgage loan originator for more details.