A reverse mortgage is something only older adults have to deal with; it is where you can get a loan if you are a homeowner and are at least sixty two years or older and it helps to take some of the equity of the house and turn it into cash.
Initially this concept was created to be a means in which helped those who were retired and were on an income that was limited. It was meant to accumulate the wealth in their homes by covering what their basics were for living each month as well as to help pay for their health care. With that being said there are no restrictions for how exactly a reverse mortgage can work or be used. In fact there are several different things that can happen, each based on a large variety of factors and information as well as data.
The reasoning as to why this loan is called a reverse mortgage is because it is not like your normal mortgage payback system that is more traditional; the system is reversed hence the word reverse. Blatantly speaking, you do not make your monthly payments to the lender like you would if you had a normal mortgage; instead with a reverse mortgage the lender makes payments to you or otherwise known as the borrower.
This has been really helpful to a lot of homeowners and it still is really helpful to a lot of homeowners. They appreciate the help and love that they don’t have to make any payments back on the loan until they either sell the house or the house is in some other way vacated.
So with a reverse mortgage as long as you live in the house you do not have to make any monthly payments of any kind when it comes to the balance that you have on the loan. However, you do need to constantly stay up to date with whatever the taxes are on the property as well as any insurance you may have as a homeowner for owning a home and if you have any fees like if you live in a condo.
Pretty much every reverse mortgage loan is insured by the FHA, or the Federal Housing Administration and they provide thousands and thousands of reverse mortgage loans each and every single year. Some reverse mortgage loans are used for improvements or even renovations on the house and not just medical costs or expenses for daily living.
There have even been some cases in which a reverse mortgage loan was used to pay off an existing mortgage that the homeowner had. You will continue to get the money and not have any issues as long as you follow all of the FHA guidelines that they have. At first this may seem hard to but the reality of the guidelines is that there are very few to follow and that they are all simple.