Home Mortgage

A reverse mortgage is a particular kind of mortgage that is designed especially for those persons who are sixty-two years old and over and who are home owners. This kind of home mortgage allows these homeowners to access the equity that has been built in their home and not have to repay the debt once they are living there. Any existing mortgage must be paid off first when you get a reverse mortgage.

Normally with a traditional home mortgage the homeowner borrows a certain sum of money and will have to make monthly payments to the lending institution. Whenever an installment is paid the loan amount is decreased and the homes equity is increased.  Where a reverse mortgage is concerned the homeowner takes a percentage of the value of the home in the form of a loan. This loan is usually disbursed either in a lump sum or as monthly payments. As the funds are paid over to the homeowner the balance of the loan increases and the home’s equity gets smaller. Repayment of the loan under a reverse mortgage is only required the term of the loan ends which is usually when the homeowner dies, sells the home, or does not use the home as their primary residence. If the homeowner is in breach of the reverse mortgage terms, repayment will be required.

Reverse mortgages have the following benefits.

• Once the homeowner resides in the home, no payments will be required.
• The income from the reverse mortgage is likely to be exempted from any form of tax. A tax advisor should be consulted to make a determination.
• The homeowner retains ownership of the home.
• The proceeds received from the reverse mortgage can be used to any existing loans.
• It provides a source of income to the homeowner which can be used as they see fit.
• Your current government assistance such as Social Security will not be affected by receiving a reverse mortgage.

A reverse mortgage is a good option for those homeowners who do not want to move out of their home but would like to tap into the equity in their home.