What is Reverse Mortgage ?

If you are age 62 or older and are "house-rich, cash-poor," a reverse mortgage may be an option to help increase your income. However, because your home is such a valuable asset, you may want to consult with your family, attorney, or financial advisor before applying for an reverse mortgage .Knowing your rights and responsibilities as a borrower may help to minimize your financial risks and avoid any threat of foreclosure or loss of your home.
A reverse mortgage is a type of home equity loan that allows you to convert some of the equity in your home into cash while you retain home ownership. Reverse Mortage works much like traditional mortgages, only in reverse. Rather than making a payment to your lenders each month, the lender pays you. Unlike conventional home equity loans, most Reverse Mortages do not require any repayment of principal, interest, or servicing fees for as long as you live in your home. Funds obtained from an Reverse Mortage may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel, and maintenance costs.

To qualify for an Reverse Mortage, you must own your home. The Reverse Mortage funds may be paid to you in a lump sum, in monthly advances, through a line-of-credit, or in a combination of the three, depending on the type of Reverse Mortage and the lender. The amount you are eligible to borrow generally is based on your age, the equity in your home, and the interest rate the lender is charging.

Because you retain title to your home with an Reverse Mortage, you also remain responsible for taxes, repairs, and maintenance. Depending on the plan you select, your Reverse Mortage becomes due with interest either when you permanently move, sell your home, die, or reach the end of the pre-selected loan term. The lender does not take title to your home when you die, but your heirs must pay off the loan. The debt is usually repaid by refinancing the loan into a forward mortgage (if the heirs are eligible) or by using the proceeds from the sale of your home.

Regardless of what your home is worth, today's combination of extremely low interest rates and highly appreciated home values means you can get more out of a reverse mortgage online than ever before. Just keep in mind that the rates on reverse mortgages "float." This means that when mortgage rates go higher, so will the interest rate at which your loan is accruing. This has no impact on the income you're receiving, but it does mean that the amount which eventually has to be repaid will increase. This can never be more than what your home is worth because the total load is capped at the value of the property.

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