When you have paid your mortgage for years month after month, the reverse mortgages do it in reverse. When you ask what is a reverse mortgage, the main benefit is, that a lender will pay you. You just have to be American, age 62 or over and the owner of your home.

1. What Is A Reverse Mortgage, You Pay It Back When You Move Or Die.

The reverse mortgages are loans, which borrowers take against the home equity and the lender will pay them according to the plan, which they have selected. Either as a lump sum, monthly payments, a credit line or as a combination of these. All interests will be added to the loan sum and paid back, when the loan will be closed. So the borrower does not pay anything on a monthly or annual basis.

2. What Is A Reverse Mortgage, How Much You Can Get?

The loan sum depends on some factors. Like about your age, about the interest rates and about the appraised value of your home. The older you are, the more valuable your home and the lower the interest rates are, the more you can get. Anything you owe on your home is subtracted from that amount, as are the loan fees you'll pay.

3. What Is A Reverse Mortgage, How Much Are The Costs?

The reverse mortgages are expensive loans. First the origination fee is 2 percentages for the first 200.000 dollars of the loan balance and 1 percentage after that. Then you have to pay a mortgage insurance of about 2 percentages plus a monthly service charge.

When you think reverse mortgages, they do not fit for a person, who will move away from the home soon. It is clearly for people, who have planned to live for years in their present home. According to the law the origination fee is capped to $ 6.000, but when you add all other costs, the sum is usually from $ 10.000 to $ 15.000.

4. What Is A Reverse Mortgage, You Have To Meet The Counselor.

This is a very useful must for a senior borrower, because the counselor can tell all the details, risks and other options. The solution for your money needs can be somewhere else. The counselor is not a representative of any lender, so you can get valuable and independent information.

5. What Is A Reverse Mortgage, The Emotional Issues.

The reverse mortgage loan touches your home and your most valuable asset in most cases. Your memories are there, your neighbours are there. For some seniors it is difficult to decrease or eat the home equity, which they have built over the years. So I think the only solution is to discuss with your relatives about this and just make a firm decision before you go on.