What does reverse mortgage mean?

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  • 1 decade ago
    Best Answer

    What a reverse mortgage is: a good tool for financial planning and flexibility in the golden years. There are only a very few requirements for eligibility. The borrower must own and live in the home as a primary residence and be 62 years of age or older. If husband and wife are both on the title, both must be over the age of 62.

    In addition, the home itself must be of a type that qualifies for the reverse mortgage program. The vast majority of single family homes qualify, as do most condominiums, townhomes, 2-4 unit owner-occupied dwellings and manufactured homes. Your income and credit levels, however, do NOT matter.

  • 6 years ago

    These offers have been designed to attract the senior citizens due to tax-free loan advances that have no impact on Social Security or Medicare advantages. Reverse mortgages are costlier than regular loans as they are increasing debt loans. The interest is totaled into the actual loan amount at the end of every month. Hence the total interest outstanding rises dramatically over the period of time, since the interest goes on compounding. Reverse mortgages consume all a part of the equity in a home. Hence the total assets of the homeowner and their heirs decrease. The borrowers also have to pay origination fees and closing costs; and at times servicing fees. These costs vary from lender to lender. Interest on reverse mortgages cannot be subtracted from income tax returns till the borrower repays the loan either partly or wholly. As homeowners can keep the title to their home, they are liable for taxes, insurance, fuel, maintenance, and other associated housing expenses.

  • 1 decade ago

    A reverse mortgage is the opposite of a regular mortgage. If you have $100,000 equity on your home, you could borrow the full amount at once and make monthly payments back to the bank. Or you could get a reverse mortgage and the bank pays you a monthly payment and adds interest to the lien on the home. It works well for older folks on a fixed income and in need of supplemental income. If they were to borrow the full amount from their homes, it would be hard for them to slowly draw a little out at a time, and the interest would add up quicker, however getting a monthly check to help them out will be easier for them. And they'd only be paying interest on the amounts given to them so far, not on the entire balance. Few banks do this, but I know Wells Fargo does. Check with a mortgage loan officer there for more info.

  • 1 decade ago

    A reverse mortgage is for senior citizens who have paid off their mortgage over the years and own their home free and clear. A reverse mortgage can be obtained to help them have more monthly income for expenses. Instead of paying a mortgage every month, the mortgage company sends them a check every month. When the house is sold, the mortgage is paid off from the proceeds.

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  • 1 decade ago

    Note, not everyone can get a reverse mortgage. They're mostly for retired citizens with lots of equity in their home and... I believe one has to be over a certain age to qualify. I'd stay away from a reverse mortgage unless you, your friend or your family member really needs the money.

  • 1 decade ago

    A reverse mortgage is a mortgage that will pay a dividend to the home owner from the equity in the owner's home.

  • Anonymous
    6 years ago

    A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower no longer use the home as their principal residence. HUD's reverse mortgage provides these benefits, and it is federally-insured as well. In a typical mortgage, a homeowner pays a monthly amount; after each payment, the owner has more equity in the house. After a certain amount of time, the mortgage will be paid off and the equity in the house will be equal to its value. In a reverse mortgage, the homeowner pays nothing each month so that the owned share of the house actually decreases over time. To qualify for a reverse mortgage in the United States, the borrower must be at least 62.

  • Anonymous
    1 decade ago

    You receive a monthly check based on the remaining equity in your home, http://www.choicefinance.net/reverse-mortgage.htm

  • 1 decade ago

    It means the lender actually has a interest in your home if you sell it. Thats how the loan is repaid

  • Anonymous
    1 decade ago

    Means you can access money from your property. Ideally, you have paid off your home and you need money.

    This way, the bank loans you money and they get their money back when you sell the house.

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