What Is A Reverse Mortgage?

A common term in today’s financial market is the reverse mortgage. Many people want to know what is a reverse mortgage and can they get one. We’ll go over exactly what a reverse mortgage is, who qualifies for one, and what the benefits and drawbacks of them are. Reverse mortgages are sometimes necessary and can be a lifesaver if you need money right away, but not everyone can get a reverse mortgage and certainly not everyone needs one. If you have some other way to get the money you need then you should consider that option first before looking into reverse mortgage information.

What are reverse mortgages? These type of mortgages are offered to older people who have a lot of equity built up in their home. Generally, they are only offered to seniors, or to people of a certain age or older, normally 62.. Each lender has their own policies as far as who they will offer a reverse mortgage to. A reverse mortgage basically “sells” your home to the lender when you move, retire to a senior community or pass away. In return for this, you receive a lump sum of money, the amount based upon the equity in your home.

There are many reverse mortgages pros and cons. Obviously if you need the money right away, and you are planning to move into a retirement community, or not expected to live very long then a reverse mortgage can be useful, allowing you to remain in your home as long as you need to, without having to pay back the loan before you die. However, on the other hand, you may get quite a bit more money simply by selling your home, since reverse mortgages rarely give you a loan in the amount of the full equity in your home.

This type of loan or mortgage can either be paid in one lump sum, or as regular payments depending upon how you set it up with your financial institution. If you don’t know when you plan on moving into a retirement community, or you have no idea how long you plan to stay in your home, and you don’t plan on giving the house to children or relatives in your will then this may be something you want to consider. Some lenders require the home within a certain period of time however, so make sure you read the policies associated with this type of mortgage carefully.