What Is A Reverse Mortgage

Section 1. What Is A Reverse Mortgage

Just what is a reverse mortgage? Well, simply described, it is the reverse of a regular mortgage. With a regular mortgage, you borrow money using your home as collateral and then pay the money back each month over time. With a reverse mortgage, you receive money (either lump sum or over time), but you do not make payments. Rather, the money is paid back from sale of your home when you sell it, move permanently away, or when you die.

Another way of looking at it is that with a regular mortgage, as you make your monthly payments, your debt goes down and your equity in your home goes up. With a reverse mortgage loan, since there are not any monthly payments, as you receive money, your debt goes up and your equity in your home goes down.

The big advantage of a reverse mortgage is that you can turn the value of your home into cash without having to move or to repay the loan each month.

Reverse mortgages can help people in different situations with different payment options:

     - If you need a monthly supplement, you can use a reverse mortgage for monthly income.

     - If you just want to have a credit line available in case you need it, you can use a reverse mortgage and have money available for when you need it.

     - If you need a lump sum for some reason such as home repairs, you can use a reverse mortgage.

Regardless of which option or combination of options you use, you will not need to worry about how you will repay the money. The money is not paid back until you either sell your home, you move away permanently, or you die. In fact, since there are not any monthly payments for you to make, you also do not need to worry about losing your home through foreclosure because of non-payment.

This ebook is for general information only and may or may not be applicable to your situation. If you have any questions whatsoever, talk with a mortgage broker or lawyer licensed in your state.

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