How does a reverse mortgage work?

You may have seen the ads or recently heard the buzz around the reverse mortgage, but you will also be asking “What is a reverse mortgage and how does it work, how can I benefit from this process/program? Essentially, it works much like a traditional mortgage only in reverse. Instead of you making payments to the lender each month, in a reverse mortgage, the lender pays you. You can unlock 10 – 40 % of your home’s market value (the amount depends on your age, marital status and current interest rates). You may take the proceeds as a cash lump sum, guaranteed monthly payments or a combination of these two methods.

With a reverse mortgage, the principal amount of the mortgage loan along with accumulated interest is not due until you pass away or sell your home. You do not have to make any monthly payments, however, you do have the option of paying out the mortgage earlier if you wish.

No related posts.