Question:

Reverse Mortgage Definition

Answer:

A reverse mortgage is a special mortgage offered to seniors to cash out equity from their homes. Unlike other loans, the customer does not pay monthly premiums; rather they will receive payments - in monthly installments or in one lump sum payment, or added to their social security. Reverse mortgages are available to seniors over 62, who are homeowners and occupy their homes. With a reverse mortgage, the home owners are responsible for paying taxes and property insurance, maintenance and repair. They also remain in ownership while they occupy the home.

A reverse mortgage has no income requirements. The amount of money a senior can receive from their equity depends mostly on age. A 65-year old senior may be getting around 30% of the equity of their home; a 90-year old borrower may receive 80% of their equity.

With a reverse mortgage, no debt is transferred to the estate or the heirs of the borrowers. Even if the reverse mortgage premiums exceed the appraised value at a certain point, the borrower will never owe more than they originally borrowed.

How is the reverse mortgage repaid?

The reverse mortgage is paid off when the borrower moves out permanently, sells the house or passes away. The reverse mortgage is repaid either in cash or through transfer of the deed to the house to the lender.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 3/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: