According to the National Reverse Mortgage Lenders Association, a reverse mortgage is defined as the following:
1. A reverse mortgage is loan available to homeowners who are 62 years or older that enables them to convert part of the equity in their home into cash.
2. The product was conceived as a means to help retirees with limited income use the accumulated wealth in their homes to cover basic monthly living expenses and pay for health care. However, there is no restriction for how reverse mortgage proceeds can be used.
3. The loan is called a reverse mortgage because the traditional mortgage payback stream is reversed. Instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower.
4. You are not required to pay back the loan until the home is sold or otherwise vacated. As long as you live in the home, you are not required to make any monthly payments towards the loan balance, but you must remain current on your property taxes, homeowners insurance and condominium fees (if you live in a condo).
If you're still confused, the infographic below may help paint a clearer picture of exactly what a reverse mortgage is, who it is and is not for, the requirements of obtaining one, and the associated fees.
If you would feel more comfortable talking to a certified REALTOR ® about a reverse mortgage or the option of selling your family home, then feel free to contact me today so that you're not left in the dark about your real estate options.
I'll help guide you step-by-step through the process and educate you on what you really need to know about transitioning to the next phase of your life gracefully.
You can also find me on Facebook. I share useful information + helpful tips for all things real estate, especially on real estate options for seniors.
All my best,
Lindsey Acton, SRES ®, REALTOR ®