What Is A Reverse Mortgage And How Does It Work?
A reverse mortgage is a loan that many senior citizens that own their own homes consider. A reverse mortgage also sometimes referred to as a lifetime mortgage. For someone to be eligible for a reverse mortgage they have to be 62 years of age or older.
A reverse mortgage is a way to get the equity that you have in your home available to you in the form of one large sum or over payments. The loan has to be paid back when the owner dies or hasn't lived in the house for over 12 months, such in a case of moving into a rest home.
When considering getting a reverse mortgage on your home it is wise to become knowledgeable about the fees that are associated with the loan itself. There is an origination fee, which is a fee for setting up the loan and processing it or getting all the proper documents ready. There are also servicing fees, which are fees for the time that you have the loan, for keeping records and statements that occur along the way.
Another thing to consider with a reverse mortgage is that interest accrues like any other loan. The homeowner is also still responsible to pay property taxes, and home insurance during the loan.
Something else to consider when getting a reverse mortgage or a lifetime mortgage is that it usually winds up utilizing all of the equity in the home. If you are a senior citizen and thinking about getting a reverse mortgage on your home, it will more than likely mean the house won't be passed along to a relative or heir.
In the past there have been some complaints about reverse mortgages due to the higher fees associated with the reverse mortgage compared to other mortgages. There have also been concerns of the mortgage being very difficult to understand, as far as the terms.
Remember that like any loan or mortgage that no two lenders are the same and it would be wise to compare all the choices and lenders.