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What is a Reverse Mortgage?A reverse mortgage is a loan that allows homeowners over the age of 62 to convert a portion of their equity in their homes into income. The equity built up over years of home mortgage payments can be paid to you. Homeowners continue to retain full ownership of the property. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer uses the home as their principal residence. Reverse mortgages are government-backed and regulated by FHA, Department of House and Urban Development (HUD) and private banks, and it is federally-insured as well. Reverse mortgages provide a steady source of tax-free income from which the proceeds may be taken as a lump sum, monthly distributions, line of credit or any combination of these financial options. The amount of money available with a
reverse mortgage is based on three (3) factors:
source: www.hud.gov
Uses for Reverse MortgagesCustomers can utilize reverse mortgages for a variety of situations. Many utilize them to pay off hospital and medical expenses. Others pay off mortgages so they eliminate monthly payments. Home improvement is another use of the money to keep houses in a good state or repair. Since fixed income customers need additional funds for daily and monthly expenses, reverse mortgages are a great source of income. |
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