A reverse mortgage is exactly what its name implies - a loan whose features make it essentially the reverse of a traditional or "forward" mortgage. Instead of paying the lender, the lender pays you. Instead of reducing your debt as the loan term progresses, you increase it. Instead of turning your income into equity, you turn your equity into income.
A reverse mortgage is a safe and easy way for seniors, 62 and older, to convert home equity into tax-free cash. Reverse mortgages are only available on a primary residence. You never give up title to the home, there are no monthly payments, there is no income qualification and you can stay in your home for as long as you like. The loan is repaid, with
interest, once all borrowers permanently leave the home. Any remaining equity belongs to you or the estate and it's worth noting; since all reverse mortgages are 'non-recourse' loans, you or your heirs will never repay more than the home's market value.
Reverse mortgage proceeds are distributed in a number of convenient ways. You can choose to receive your money:
- as a lump sum
- as monthly payments
- as a line of credit
- or as a combination of the above
You can use the money you receive to meet virtually any financial or retirement goal. Many borrowers have used their money for health care cost, home repair or remodeling, to eliminate forward mortgage payments, to pay down debt; or to purchase a new car, travel or fund a grandchild's education.
