6 Frequently Asked Questions About Reverse Mortgages
1. What is a Reverse Mortgage?A reverse mortgage is a loan product available to homeowners of at least 62 years of age. These mortgages allow the homeowner to convert part of the equity in their home into cash.
With a regular mortgage, you make monthly payments to a lender to buy your house over time, turning your cash into equity. With a reverse mortgage, a lender makes monthly payments to you, exchanging a percentage of your home equity for cash.
Originally, reverse mortgages were designed as a loan of last resort to help cash-poor seniors remain in their homes. However, according to the AARP, participation in reverse mortgage plans has now broadened as a result of widespread TV advertising and the adverse effects of the recession.
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