Also known as home equity conversion mortgages (HECMs), Reverse Mortgages are a type of home loan extended exclusively to older individuals, i.e. those over the age of 62 years. Such a loan allows aged homeowners to convert part of their home equity into cash, which may then be used to meet their needs. Essentially speaking thus, with a reverse mortgage, it is not the lender who is receiving a monthly instalment from the borrower but the other way around. In fact, the borrower is not expected to pay back the loan unless the home vacated or sold. Here are all important facts about reverse mortgages you need to know.
1. Reverse Mortgage Entails No Monthly Mortgage Payment
Since the homeowner is receiving the loan against the equity in their home, they do not have to pay any monthly mortgage to the lending bank. However, they do need to pay all real estate taxes, homeowners insurance and homeowners association dues levied on their property. Some reverse mortgage companies due attempt to dupe the elderly by having them sign up for an annuity/life insurance so do your homework and choose the right lender.