A reverse mortgage is a loan, secured by a residential property that enables the borrower access to a portion of the equity in their home while deferring the payment of the loan until they die, sell, or move out of the house.
These type loans are designed for homeowners 62 years and older and do not require monthly mortgage payments. However, borrowers are still responsible for property taxes and homeowner’s insurance.
Borrowers can receive proceeds through various options. Most borrowers receive monthly payment plans which can help balance their ongoing or future expenses. Others choose a lump sum payment at closing … or, a third option can be a line of credit for future draws. Regardless of the choice, the proceeds are tax free.
How does a reverse mortgage work? Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The loan balance can eventually grow, especially if the borrower continues to live in the ...
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