Reverse Mortgages: What exactly are they?

Many people are talking about Reverse Mortgages right now, so we thought we’d take the opportunity to explore different aspects of this loan option.

In this article, we’ll review the the basics. A Reverse Mortgage is a low-interest loan for a senior homeowner that uses a home’s equity as collateral. The loan amount is a percentage of the home’s value determined by the age of the youngest homeowner.

The loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 12 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not liable if the home sells for less than the balance of the reverse mortgage.

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In the next few days, we’ll touch on the pros and cons of Reverse Mortages, so stay tuned!