Apr 11 2011

What is a reverse mortgage?

Category: Finance,Real Estate

Answer:

Reverse MortgageA reverse mortgage is a type of loan that is available to individuals that are 62 years of age or older. It allows the home owner to borrow a portion of their current home equity either through a lump sum payment or installments. So essentially, with a reverse mortgage, you’ll get money in the form of a loan and the lender gets a guarantee that they will be repaid when the home is sold or refinanced. It differs from a traditional home equity loan because the repayment is deferred until the home owner dies or sells the dwelling. Any interest that has accumulated from the loan is also added to the lien on the property. In most cases, the value your home, your age, and the current interest rate will determine the amount you’ll be able to borrow (usually 30% – 60% of home value). Many seniors can use this type of loan for a number of expenses including but not limited to: supplementing retirement income, paying medical expenses, and making home improvements.


Tags: , , ,


 

 

Challenge this Answer and/or Discuss