What is a Reverse Mortgage?

For a person that is over sixty two years old who has a paid in full home, a great thing could be waiting for you. A reverse mortgage could be just what you are looking for. What is a reverse mortgage, you may be asking?

Reverse mortgages were created because our elderly population are facing financial hardships in these days. In many cases after they are retired they have a fixed income and cannot afford to live comfortable any more. In this case they are given the opportunity to borrow the money that they have in equity for their home and not make a payment until much later.

If an elderly person has a clear title for their home and has several thousand dollars in equity built into the home they have the option of borrowing that amount of money. They will decide if they are interested in a lump sum payment or if they would like to have the monies spread out on monthly payment.

There will be no monthly payments due on this loan until one of several things occur. The first thing that could cause the loan to become due is if the home owner was to pass away. At that point the home would normally be sold and the reverse mortgage would then be paid with any money made from the sale. If the home owner decides to move out of the house prior to their death, this will also make the loan due and payable.

If it is necessary that the home owner move into a nursing facility or retirement community, than the loan would also become due. Typically if a person has to move into a nursing facility their home would be sold and the loan would be paid off in full then. They may also choose to entrust the home to someone they know and let them be a tenant making the loan payments for the home owner.

So when you ask the question, what is a reverse mortgage, know that these are the answers. It is a great benefit for our elderly community and can preserve the good quality of life that they want.