Reverse Mortgages

Special Loans for Seniors who can Borrow Now and Worry Later

A reverse mortgage is a type of home loan available to senior citizens in the United States. It is used as a way of turning their home's equity into a flow of cash consisting of one or more payments. This is a method of retaining home ownership and avoiding monthly payments on the borrowed cash.

With a reverse mortgage, repayment of the money borrowed occurs when the borrower is no longer living in the home against which the money was borrowed against.

With a normal conventional mortgage, a borrower pays a monthly payment which contributes in part to the principal balance on the mortgage. This means each month the borrower pays, he earns a little more equity on the house. With a reverse mortgage, the borrower pays nothing each month and all interest and principal on the debt is added to the total lien on the property. Every time the borrower receives a payment due to the loan, the debt on the house increases. The home lender is acually buying the home from the borrower.

Some of the requirements to qualify for a reverse mortgage are:

Applicant must be at least 62 years old

The borrower must pay off an existing mortgage with proceeds from the reverse mortgage (and additional funds, if needed)

There are no minimum income or credit requirements in most cases

The borrower must seek HUD-approved mortgage counseling before the reverse mortgage can be closed

Mobile homes and certain other lower-value dwellings do not qualify

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Home Buying Vocabulary

First Mortgage

A real estate loan that creates a primary lien against real property.

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Frequently Asked Question

Is it worth refinancing even if my rate will only be reduced by a little bit?

Answer:
Yes, as long as you keep your home long enough to where the money saved on interest more than makes up for the money spent on closing costs.

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