What is a Reverse Mortgage?
A reverse mortgage is a loan for home owners, aged 62 and older, which allows them to convert the equity they have built up in their homes into cash, while making no monthly payments. Your Nations Lending Personal Mortgage Advisor can explain the program, but here’s how it works:
Insured by the Federal Housing Administration, a Reverse Mortgage works by using the home’s equity as collateral for a new loan. This new loan often times pays off an existing mortgage, eliminates monthly payments, and helps finance renovations or living expenses. The amount of money the borrower can receive is determined by the age of the youngest borrower, interest rates and the lesser of the home’s appraised value, sale price and the maximum lending limit. The loan does not generally have to be repaid until the home is sold, or until the last surviving homeowner moves out of the property or passes away. At that time, the estate typically sells the home to repay the balance of the reverse mortgage and the heirs receive any remaining equity. The estate is not personally liable for any additional mortgage debt if the home sells for less than the payoff amount of the reverse mortgage loan.