In a word, a reverse mortgage is a loan a homeowner aged 62 or older with considerable home equity can borrow against the home's value and receive funds as a lump sum, fixed monthly payment, or line of credit.
A reverse mortgage loan, like a traditional mortgage, allows homeowners to borrow money using their home as security for the loan. Also, like a conventional mortgage, the title to your home remains in your name when you take out a reverse mortgage loan. However, unlike a traditional mortgage, borrowers don't make monthly mortgage payments with a reverse mortgage loan. Instead, the loan is repaid when the borrower no longer resides in the home. Interest and fees are added to the loan balance each month, and the balance grows. With a reverse mortgage loan, homeowners must pay property taxes and homeowners insurance, use the property as their principal residence, and keep their house in good condition.
To be eligible for a Reverse Mortgage, the applicant must be 62 years or older, own the property, and occupy it as their main residence. In addition, they must maintain the home with required repairs, property taxes, and insurance. Also, the property does need to satisfy specific FHA property standards. Finally, the applicant must participate in a reverse mortgage counseling session (this can be done over the phone or in person.)
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