What is Reverse Mortgage and how does it work?
A reverse mortgage allows you to stay at the home you love while converts its equity into useable cash, similar to home equity line of credit. Unique benefit is you do not need to pay back loan month after month! Instead, you payback at the end.
How Does it Work?
The borrower is at least 62 years of age or older and has equity to borrow in their home. Must be primary residence and maintain payments for property tax, insurance and other property charges and maintenance of home.
If borrower wants money for retirement as their income, debt consolidation, or even paying for their grandchildren education, Whatever the reason, a reverse mortgage can be your answer!
Borrower will move forward with the loan process and then decide how they want to receive the money. Options are available such as a line of credit, cash lump sum, or a monthly payment.
How the loan is paid back?
A lot of times reverse mortgage borrowers do not have to make a payment. This is only because the borrower remains in their primary residence or the borrower has passed away.
The loan only needs to be repaid if the borrower decides to sell their homes. moves out of the primary residence or lastly passes away. However, if the borrower decides to repay the loan, they are more than welcome to do so at any time. It is a non-recourse loan, so you, your estate can’t owe more than value of the home when the loan comes due.
Deciding if the reverse mortgage is right for you can be a huge financial decision. It can also be utilized as a financial tool and not only for seniors that have run out of options.