What is a Reverse Mortgage?
A reverse mortgage is a type of loan that allows senior homeowners, who are age 62 or older to convert the equity in their home into a tax free income while still maintaining ownership of their home or have to make any monthly payments. The reverse mortgage loan is due when the borrower permanently leaves the home or is no longer alive.
How does a Reverse Mortgage Work?Payment Options - A borrower can elect to receive funds from the reverse mortgage in the following ways:
- Upfront lumpsum payment
- Term monthly payments - Payments of equal sum of money for a fixed period of months or years.
- Tenure monthly payments - Tenure payments have no specified end date and continue throughout the life of the loan or until the person dies or vacates the residence.
- Line of credit
- Combination of upfront payment with term monthly payments
- Combination of upfront payment with tenure monthly payments