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What is Reverse Mortgage

Reverse Mortgage is a special tax free loan in the US and is made available to senior citizens (US citizens who are 62 years of age and over). A tax free loan, reverse mortgage is also called Home Equity Conversion Mortgage. It used as a method of converting the home equity into cash payments. Basically, a senior US citizen can receive tax free cash payments (one time or monthly) equal to the amount of home equity from the lender. The ownership of the property remains with the senior citizen and the loan is to be repaid only when the owner/senior citizen is no longer living in the home or is deceased.

How is Reverse Mortgage different from a typical Mortgage?

A typical mortgage - Home owner takes a loan and repays it in the form of monthly equal installments. As each payment is made, the home owner's equity in the house increases and loan decreases. When the loan/mortgage is paid in full (all installments are paid), the home is debt free and the home owner has full ownership. A reverse mortgage - Home owner pays nothing each month. The interest amount on the debt is attached against the property as a security for payment. As the owner begins to receive the monthly payments, the debt on the property increases each month.

How is Reverse Mortgage good for me?

If you are over 62 and have little or no income but have a home, reverse mortgage can help! Reverse mortgage lenders are informed by FHA on how much they can lend you based on your age and home equity.