What is a reverse mortgage? Reverse mortgage - a special type of loan that homeowners can get some cash at home with no further loan payments until the home owner lives in it ...
In the case of the conventional loan to buy a house you make monthly payments to the lender. Over time, the amount you owe is reduced and the value of your capital (equity capital) increases.
What is a reverse mortgage?
When using the reverse mortgage, you pay no monthly payments to the bank. In turn, the bank pays you. You decide in what form you want to get a loan, a large sum or a sum equal to the monthly payment or a combination of these two solutions.
Normally you do not have to repay the reverse mortgage as long as you live in your home. The bank gets their money back when you sell your house, move or die. It is important to emphasize that when you go in the reverse mortgage, you still own their home.
However, when your heirs receive your home, the amount of your reverse mortgage loan must be repaid to the bank.
If the loan amount was equal to or greater than the value of your home, your heirs get nothing.
Unlike traditional loans, reverse mortgages do not have any claims on the income or credit qualifications. The amount you can take back the use of the credit depends on several factors - your age, the appraised value of your home, etc.
The general principle is that the older you are and the more the value of your home, the more money you can borrow ...