Reverse Mortgage Services Debt - Reverse Mortgage

A reverse mortgage is a special type of loan that allows you to borrow against the equity that you’ve built up in your home. You can put the money towards anything you like, from paying medical bills to making home improvements. Unlike a traditional home equity loan, a reverse mortgage doesn’t need to be paid back immediately, perhaps not even during your lifetime. That means no monthly checks to write to your lender.

Sounds simple, right?

Reverse mortgages are loans available to homeowners age 62 and older than allow them to borrow money based on the value of their homes. Unlike other kinds of loans, borrowers don’t have to pay back the debt immediately, instead deferring payment until they move out of the home or pass away – in which case the payment will be taken from their estate or sale of the home.

A reverse mortgage is a long-term solution to your financial needs. You will use the equity you have built up in your home to gain access to either a one-time advance or recurring advances of cash. A reverse mortgage works by offering a safe solution to access your home equity and turn into tax-free cash without the requirement of monthly mortgage payments. Unlike a traditional mortgage, with the reverse mortgage, you will not need to make any principal or interest payments until you and your spouse leave the home. You don’t need to make any payments on a reverse mortgage until the loan is due. This is usually when you move out of your home, sell it or the last borrows dies. You will owe more interest on a reverse mortgage the longer you go without making payments. This may result in you having less equity in your home. You may be able to borrow up to a certain percentage of the current value of your home. The maximum amount you will be able to borrow will depend on your age, your home’s appraised value, and your lender.

HOW DO REVERSE MORTGAGE WORK?

When you have a regular mortgage, you pay the lender every month to buy your home over time. In a reverse mortgage, you get a loan in which the lender pays out. Reverse mortgages take part of the equity in your home and convert it into payments to you – a kind of advance payment on your home equity. The money you get usually is tax-free. Generally, you don’t have to pay back the money for as long as you live in your home. When you die, sell your home, or move out, you, your spouse, or your estate would repay the loan. Sometimes that means selling the home to get money to repay the loan.