With people now living 20 or more years into their retirement, a reverse mortgage has become more of an income planning tool for some and a lifeline cash source for others.
Exactly What Is A Reverse Mortgage?
It is a type of home equity loan for people 62 or older. It is also officially known as an HECM loan, or Home Equity Conversion Mortgage, which enable seniors to withdraw equity from their homes as collateral.
The loan is called a reverse mortgage because instead of making payments to a lender, the lender makes payments to the borrower. The borrower does not have to pay back the loan until the home is sold or is otherwise vacated. As long as the borrower lives in the home, he or she is not required to make any monthly payments toward the loan balance. However, the borrower must remain current on property taxes, homeowners insurance and, if applicable, homeowners association dues.
The payments to the borrower can be made in a variety of ways, including:
- A lump sum of cash
- Equal monthly payments as long as the homeowner lives in the home
- Equal monthly payments for a fixed number or years
- A Line Of Credit drawn on any amount until the line is exhausted
- Any combination of the above
There are closing costs associated with a reverse mortgage. To learn more about all the benefits and how we can customize a reverse mortgage to specifically meet your needs, please complete the calculator page and we will be happy to contact you or you can also simply call 1-800-437-7462.