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This answer has no page number, because it is going to be answered right here! A reverse mortgage is a mortgage (a loan on a house). However, unlike a standard mortgage (also called a forward mortgage), where you pay the bank something every month, a reverse mortgage means the bank pays you, the homeowner. (It can be every month or all at once -- but more on that later.)
Why would a bank pay you, and not the other way around? Essentially, the bank is lending you money and accumulating interest on the loan. Unlike a standard deal, however, you remain in your home, and you cannot owe more than the house is worth. The loan is not due until you move out of the house or pass away, and not one moment before, as long as you maintain the home and pay items such as property taxes.
The reverse mortgage is worth noting because it is an excellent source of retirement income for many people, particularly those with a lot of equity in their homes. You must be at least 62 years of age to take advantage of a reverse mortgage in the United States. |
