By What is a Reverse Mortgage
A Reverse Mortgage is a unique loan program that enables those homeowners age 62 and older to use their equity without creating a monthly payment obligation. Thus, the reverse mortgage program enables seniors that may be “real estate rich and cash poor” to unlock the financial potential in their homes and let their homes work for them. Additionally, the reverse mortgage has no income or credit requirements to qualify.
In general, the Reverse Mortgage does not become payable until the senior homeowner no longer occupies the property as his/her primary residence. At that time, the outstanding principal and the accrued interest become due. Typically, the loan is paid off with the proceeds of the sale of the home from the borrower’s estate. However, the borrower’s estate/family may decide to refinance the loan and retain the property. Any proceeds in excess of the amount owed to the lender belong to the borrower or the borrower’s estate.
Thus, the Reverse Mortgage is simply a loan against the borrower’s principle residence. The borrower retains ownership of the home. If the borrower decides to sell the property, any funds in excess of the payoff amount belong to the borrower, as is the case with a regular mortgage or home equity loan.
Some plans provide for fixed rate interest. Others involve adjustable rates that change over the loan term based upon market conditions.
Use our reverse mortgage calculator to determine the balance of a reverse mortgage loan.