The Basics of Reverse Mortgage

As you know there are lots of publicity lately about the availability of reverse mortgages, but lots of people do not understand what a reverse mortgage or how one works. This article attempts to explain the contents of a reverse mortgage and if it may be a good option for you.

A reverse mortgage is a special option only available to senior’s age 62 or older. With a reverse mortgage you are basically getting a loan based on the equity in your home. The most important difference between a reverse mortgage and a traditional mortgage is that the reverse mortgage makes payments to you, instead of you making payments to a lender. The equity that you have provided in your home will continue to shrink as you accept payments from the reverse mortgage lender. And you can choose between accepting monthly payments and getting a large lump sum to cover large unexpected expenses. In fact, you can set up the amount and frequency of payments that you receive from the reverse mortgage in just about any way that will best suit you and your needs.

Unlike a traditional home mortgage, a reverse mortgage will continue to grow as you continue to take payments. Instead of the amount that you owe shrinking each month, the amount you owe will grow over time. You will also be required to pay interest on the reverse mortgage and lender feers.The total amount that you can get from a reverse mortgage is based upon the market worth of your home. The amount that you receive from your reverse mortgage will never exceed the market value of your house.