Reverse Mortgage as the name suggests is the opposite of the Mortgage. Reverse Mortgage is the loan which the home owner takes on the home. The loan can be a single lump sum or multiple monthly payments. The loan and the interest are added till the tenure of the loan.
The loan ends when the home owner dies, sells the home or moves out of the home. The loan amount will be paid using the money raised from the sale or the heirs can refinance the loan if the home owner dies. In Reverse Mortgage, the home owner need not be concerned about the difference that might arise between the total loan and the selling price of the home. If the home is sold for a higher price then the difference amount is paid either to the home owner or the heirs. If the home is sold at a lesser price compared with the total loan amount, then the bank which paid the Reverse Mortgage will bear the loss.
Reverse Mortgage can be availed only by seniors aged above 62 years for obvious reasons. The maximum loan one can take through Reverse Mortgage is $625,500 immaterial of how much the property’s market value is. Reverse Mortgage is the only Mortgage that should be valid on the existing property. All other mortgages on the property should be closed using the amount raised from the Reverse Mortgage or using the personal funds of the
home owner.
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