Reverse mortgages are available to homeowners aged 62 and older. With a reverse mortgage, you can access the equity you have built up in your home and use it for living expenses, a vacation, health care costs, or anything else. Unlike other loan products, reverse mortgages do not require any monthly payments.
When you take out a reverse loan, your lender will give you the disbursement in one of several ways, such as a lump sum or monthly payments. Your loan and the interest will cause your mortgage balance to increase rather than decrease each month because you will not make any payments on the loan.
When you take out a regular home loan, you can use it to buy a home or refinance, and you will need to make monthly payments on your loan. A reverse mortgage allows you to borrow against your home instead, and you will not make any payments. Nothing is due on the loan until the home is sold or the borrower either moves out of the home or dies. The balance will continue to increase due to the loan balance and interest charges.
Sometimes reverse loans are compared to HELOCs or second mortgages. The important difference is a reverse mortgage does not have any monthly payments. Both HELOCs and equity loans have very strict underwriting guidelines in terms of income and credit, unlike a reverse mortgage, which is very easy to qualify for.
When you choose a reverse loan, you can get a much higher loan amount that is determined by the age of the borrower. The older the borrower, the higher the loan can be.
Homeowners have many reasons to consider a reverse mortgage. The following are some of the most common reasons our customers choose this loan option.