What Is A Reverse Mortgage And How Does It Work?

A reverse mortgage is for anyone who is over 62 and has equity in their home. A reverse mortgage is for seniors who need additional income. In some cases a reverse mortgage is taken out by grandparent who wants to help a child or grandchild buy a home, go to school, or any number of other reasons a very few reasons.

The main drawback of a reverse mortgage

One negative thing about a reverse mortgage is the initial cost that is rolled into the loan. It depends where you live, but you will not be able to have access to the total value of your home. How is the reverse mortgage money paid out?

If you currently have a mortgage then it either has to be paid off prior, or the reverse mortgage will pay it off.

When taking out a reverse mortgage you have choices of how to receive the available money: a fixed monthly amount, a fixed lump sum payment, or an open check book to the amount allowed. The older you are the more you can use. If it is FHA insured and you still keep the ownership of your house.

Repayments?

If you do a reverse mortgage and use the money you do not have to pay it back unless you move out of the house for a period longer than one year.

Note: Always seek professional legal and financial advice before taking out any kind of mortgage. Laws and regulations differ from Country to Country so always check laws pertaining to where you live.