What is a Reverse Mortgage?
A Reverse Mortgage is a home loan (used for any purpose) where seniors, 62 and older, can access the equity (cash) built up in their home.
There are several different Reverse Mortgage programs. Fannie Mae Home Keeper®, the HUD-insured Home Equity Conversion Mortgage (HECM) and the Jumbo Cash Account Plan are three such programs. As demand increases, more Reverse Mortgage programs from different organizations will become available.
It is called a Reverse Mortgage because you borrow money from a lender, but the lender makes monthly payments to you, rather than you making monthly payments to the lender. All interest is paid at the end of the loan, rather than in the beginning. What are some of the benefits of a Reverse Mortgage?
As the homeowner receives monthly cash income, the loan balance increases. In the following twelve-month example, the homeowner begins with a debt-free home. As money is received by the homeowner, the mortgage grows. By the end of month twelve, the homeowner owes the bank $6,000 plus $232.44 interest. All Reverse Mortgage loans have a variable rate.
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