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Reverse Mortgage

Reverse Mortgage – An Overview.

Many a times, retired homeowners or senior citizens are concerned that their retirement savings or their social security income might not keep them immune from the effects of inflation. Retirees or prospective retirees who own a home can now increase their income through their homes by way of reverse mortgage loan.

What is a Reverse Mortgage?

Reverse mortgage is a kind of loan that is available to those who are 62 years and older. Herein, the home equity is released to the homeowner in a lump sum or through multiple payments. The homeowner obligation concerning loan repayment is deferred until the owner is no more, or the home is sold, or the homeowner leaves the home.

The biggest benefit and idea behind reverse mortgage is the fact that the homeowner makes absolutely no payments and all the accumulated interest is added to the lien on the property.

Reverse Mortgage Facts

» The concept of reverse mortgage was specially established by the US department of Housing and Urban Development in a bid to help senior citizens, enabling them to withstand the rising living expenses and medical costs.

» It allows homeowners to borrow money on their home equity.

» The important qualification for a reverse mortgage loan is that the applicant must be 62 years or older and have outright home ownership. In case wherein one does not have an outright ownership of the home, having a minimal amount of balance left on the current mortgage is mandatory.

Benefits of Reverse Mortgage

A reverse mortgage loan does not require a borrower to make monthly repayments as long as he or she is living in the home. If the homeowner is deceased or decides to sell the home, then the lender recovers the loan amount and accrued interest when the home is sold.

The great thing about a reverse mortgage is that a borrower does not have to show minimum income or a fixed amount of assets in order to qualify for a reverse mortgage loan. As long as a borrower meets the qualifying parameters, they will get a HUD reverse mortgage.

A borrower is not burdened by the prospect of repaying a loan on a monthly basis or paying a high interest rate. In fact, the banks will pay you on a monthly basis or in a lump sum.

Overall, a reverse mortgage loan is one of the best ways that a senior citizen homeowner can plan to meet the burgeoning expenses.

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