A New Kind of Loan: In Reverse
A "reverse" mortgage is a loan against your home that you
do not have to pay back for as long as you live there. With a "reverse" mortgage, you can turn the value of your home into cash without having to move or repay the loan each month. The cash from a "reverse" mortgage can be paid to you in several ways:

 

  • all at once, in a single lump sum of cash.
  • as a regular monthly cash advance.
  • as a "creditline" account that lets you decide when and how much of your available cash is paid to you; or
  • as a combination of these payment methods.

No matter how this loan is paid out to you, you typically don't have to pay anything back until you die, sell your home, or permanently move out of your home.

To be eligible for most "reverse" mortgages you must:

  • own your home.

  • be at least 62 years of age.

To qualify for most "forward" mortgages, you need income in order to show the lender how much you can afford to pay back each month. But with a "reverse" mortgage you do not have to make monthly repayments, so you do not need income to qualify for a "reverse" mortgage. So, "forward" mortgages differ from "reverse" mortgages because:

  • you do not need income to qualify for a "reverse" mortgage.

  • you do not have to make monthly repayments on a "reverse" mortgage.

"Forward" and "reverse" mortgages create debt against your home and both affect how much equity or ownership value you have in your home, but they do so in opposite ways.

With a "forward" mortgage you made monthly payments over many years, and during that time:

  • your debt decreased; and

  • your home equity increased.

With a "reverse" mortgage, you are taking your equity out in cash. So with a "reverse" mortgage:

  • your debt increases; and

  • your home equity decreases; unless your home's value is growing at a high rate.

A "reverse" mortgage is a "rising debt, falling equity" situation. But that is exactly what informed "reverse" mortgage borrower's want: to "spend down" their home equity while they live in their homes without having to make monthly loan repayments.

Give us a call for a detailed explanation of "reverse" mortgages and find out if a "reverse" mortgage is right for you.

CALL US TODAY AT 800-803-8008

 

 

 
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