What Is A Reverse Mortgage

If you're a senior, and a homeowner, then you may have heard the term reverse mortgage being thrown around quite a bit these days. But, what is a reverse mortgage? In this article, I will give you everything you need to know about reverse mortgages.

If you are over 62 years of age, and have equity built up in your home, then you can qualify for a reverse mortgage. A reverse mortgage is a way for you to take out a loan against the equity of your home so you have money for retirement. Then, when you pass away or are forced to move from the home into assisted care or other type of living arrangement, your loan is collected by selling the home.

This means the money received from the loan does not require you to pay it back with monthly payments.

If you are awarded a reverse mortgage then you can choose to receive the loan in one lump sum or in smaller monthly installments. When you receive the loan, you can spend it on whatever you feel like spending it on so long as your mortgage is paid off first. If your mortgage is not paid off when you receive a reverse mortgage, then before you can spend any of your loan money you first have to apply it to your mortgage.

What is a reverse mortgage loan calculated by? The amount you receive in your reverse mortgage depends primarily upon the equity you have in the property. Other factors include the interest-rate, your age, if you decide to take the payment as a line of credit, a lump sum, or monthly payments, and also the location of your property factors in to the calculation as well.

Another thing you should know about reverse mortgages is the loan advance that you receive is not considered as taxable income by the Internal Revenue Service. However, annuity advances can be taxed partially.

A reverse mortgage ends when either the homeowner dies, the house is sold, or in some cases depending upon the terms of the loan, the homeowner moves from the house for 12 consecutive months. The reverse mortgage is paid off with the money that is received from the house being sold or can even be refinanced by those who inherit the homeowner's estate.

In conclusion, I have given you the answer to the question -- what is a reverse mortgage? Take this information into consideration to see if it is something you should investigate further.