Reverse Mortgage
So What Does Reverse Mortgage Mean?A kind of mortgage when a homeowner can take a loan versus the property value of his / her home. No repayment with the mortgage (principal or interest) is needed until the borrower dies or the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the duration of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the worthiness of the property over the life of the money.
Often, the lender requires that there can be no other liens against the home. Any existing liens must be paid off with the proceeds of the reverse mortgage.
Investopedia explains Reverse Mortgage
A reverse mortgage offers income that people can tap into for his or her retirement. The benefit of a reverse mortgage is that the borrower's credit is not relevant, and is often unchecked, for the reason that borrower doesn't need to make any payments. As the home serves as collateral, it must be purchased from order to repay the mortgage if the borrower dies (in some cases, the heirs have the option of repaying the mortgage without selling the home). These types of mortgages have large origination costs relative to other types of mortgages. These costs join the primary loan balance and accrue interest. Senior citizen borrowers with a good credit rating should carefully analyze the options of a more common mortgage, such as a home equity loan, against a reverse mortgage.
So What Does Reverse Mortgage Mean?A kind of mortgage when a homeowner can take a loan versus the property value of his / her home. No repayment with the mortgage (principal or interest) is needed until the borrower dies or the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the duration of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the worthiness of the property over the life of the money.
Often, the lender requires that there can be no other liens against the home. Any existing liens must be paid off with the proceeds of the reverse mortgage.
Investopedia explains Reverse Mortgage
A reverse mortgage offers income that people can tap into for his or her retirement. The benefit of a reverse mortgage is that the borrower's credit is not relevant, and is often unchecked, for the reason that borrower doesn't need to make any payments. As the home serves as collateral, it must be purchased from order to repay the mortgage if the borrower dies (in some cases, the heirs have the option of repaying the mortgage without selling the home). These types of mortgages have large origination costs relative to other types of mortgages. These costs join the primary loan balance and accrue interest. Senior citizen borrowers with a good credit rating should carefully analyze the options of a more common mortgage, such as a home equity loan, against a reverse mortgage.
