If you've somehow missed the tv commercials or junk mail trying to get you interested in the reverse mortgage you probably live a sheltered existence.
The reality is a solid seventy percent of seniors still don't know what the reverse mortgage is or how it works.
That's why I'm here. I'm the answer man and I'm here to educate.
The first thing to do is throw out any preconceived notion, anything you've heard from some guy, and keep in mind a reverse mortgage is nothing more than a mortgage on your home. The lender loans money using equity as security for its investment.
In this prior paragraph this definition could describe a traditional mortgage or a reverse mortgage. That is my point. I don't want people thinking the reverse mortgage is much different than a forward mortgage.
They are very similar. They just works a little differently.
The lender is loaning money to you. You get to use that money for whatever purpose you desire. It's your money afterall.
The mortgage proceeds may be used to buy a house, to go on vacation, pay off credit card debt, or to pay daily bills.
All I'm saying is the borrower taps the built up equity or money in the home to use for the borrower's benefit.
The reverse mortgage is a popular tool to tap this money as the borrower need not repay the bank on a periodic basis.
Well, if the lender isn't receiving payments how does it stay in business, and why would it do this?
The lender simply doesn't make money today. Instead of receiving monthly payments the lender lets interest accumulate on itself. It is the quintessential negative equity mortgage.
When the borrower passes away or sells the home, whichever comes first, the mortgage company is repaid the loan plus interest.
The title to the home is never out of the borrower's name or the borrower's heir's names in the event the borrower passes on and wills the home.
The real hook to reverse mortgage, which is really helping many seniors in dire financial straights, is the lack of period payment to the lender.
The downside is closing costs are higher than typical forward mortgages, which can make the reverse mortgage a poor choice in certain circumstances.
The reality is a solid seventy percent of seniors still don't know what the reverse mortgage is or how it works.
That's why I'm here. I'm the answer man and I'm here to educate.
The first thing to do is throw out any preconceived notion, anything you've heard from some guy, and keep in mind a reverse mortgage is nothing more than a mortgage on your home. The lender loans money using equity as security for its investment.
In this prior paragraph this definition could describe a traditional mortgage or a reverse mortgage. That is my point. I don't want people thinking the reverse mortgage is much different than a forward mortgage.
They are very similar. They just works a little differently.
The lender is loaning money to you. You get to use that money for whatever purpose you desire. It's your money afterall.
The mortgage proceeds may be used to buy a house, to go on vacation, pay off credit card debt, or to pay daily bills.
All I'm saying is the borrower taps the built up equity or money in the home to use for the borrower's benefit.
The reverse mortgage is a popular tool to tap this money as the borrower need not repay the bank on a periodic basis.
Well, if the lender isn't receiving payments how does it stay in business, and why would it do this?
The lender simply doesn't make money today. Instead of receiving monthly payments the lender lets interest accumulate on itself. It is the quintessential negative equity mortgage.
When the borrower passes away or sells the home, whichever comes first, the mortgage company is repaid the loan plus interest.
The title to the home is never out of the borrower's name or the borrower's heir's names in the event the borrower passes on and wills the home.
The real hook to reverse mortgage, which is really helping many seniors in dire financial straights, is the lack of period payment to the lender.
The downside is closing costs are higher than typical forward mortgages, which can make the reverse mortgage a poor choice in certain circumstances.
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