WHAT IS A REVERSE MORTGAGE?
A reverse mortgage is a type of mortgage that enables older homeowners (at least 62-years old) to convert some of the equity they
have in their homes into tax-free income while still keeping their homes. They do not have to give up title or take on any new mortgage
payments, and it's so-named because the payment setup is essentially reversed - instead of the homeowner making payments to a lender, the
lender makes payments to the homeowner. The amount of money that can be secured through a reverse mortgage depends on several factors,
including the age of the homeowner (or the age of the youngest spouse if the homeowners are a couple), the home's appraised value, and
interest rates. In general, the older the homeowner and the more equity they have in their home, the more money they'll get from a
reverse mortgage.
Once qualified for a reverse mortgage, the homeowner has the option of receiving the funds in a variety of ways. They may choose to take
a lump sum, fixed monthly payments, as a line of credit, or as a combination of some or all of these options. Once received, the money
can be used for anything the homeowner wants, including to help cover daily expenses, home repairs or modifications, health care costs,
to help pay off existing debts, to buy a new car, take a vacation, cover property taxes, or prevent a foreclosure. And the loan does not
get paid back as long as it is outstanding. Payments are only due after the homeowner leaves the home as their primary residence, whether
it be through passing away, selling the home, or permanently moving out.
For answers to questions this section did not answer, please refer to either the "FAQ for Homeowners" section or the "FAQ
for Heirs" section.
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