Reverse Loans

A reverse mortgage is a financial product that allows homeowners, typically aged 62 or older, to convert part of the equity in their home into cash while retaining ownership and living in the home. Unlike a traditional mortgage, where the homeowner makes monthly payments to the lender, in a reverse mortgage, the lender makes payments to the homeowner. Here's an overview of how reverse mortgages work, their key features, and considerations:

How a Reverse Mortgage Works

  1. Eligibility: Homeowners must be at least 62 years old and have significant equity in their home. The home must be the primary residence.
  2. Loan Amount: The amount available to borrow depends on the homeowner's age, the home's value, current interest rates, and the chosen payout plan.
  3. Payout Options: Borrowers can receive funds as a lump sum, monthly payments, a line of credit, or a combination of these options.
  4. No Monthly Payments: Homeowners do not make monthly mortgage payments. The loan is repaid when the homeowner sells the home, moves out permanently, or passes away.
  5. Interest and Fees: Interest accrues on the loan balance, and there may be upfront costs such as origination fees, mortgage insurance premiums, and closing costs.