Facts About Reverse Mortgages

2007-03-08 10:33:40

( Financial )



If you are a homeowner and is a senior citizen, you can avail yourself of a special financing called reverse mortgage. Under this type of loan you will get cash from a lender in exchange for a portion of your home equity. Liberty Reverse Mortgage is one of the many providers of such home financing. What is interesting about reverse mortgage is that you do not need to have to shell out monthly payments for your loan and you don’t even have to leave your house. In fact, you are not obligated to pay for your loan for as long as you make the house under mortgage your permanent residence. To get more reverse mortgage information it is best to visit your bank or other debt providers.

You also have different options on how you would like to receive the cash on your mortgage. Here are some of your available alternatives:
• single lump sum;
• fixed monthly cash advance;
• line of credit; or
• a mixture of the above methods of payment.

Reverse mortgage vs. other home loan mortgages

Reverse mortgage is different from other home loans in two aspects. First, you don’t need have an income to qualify for a reverse mortgage. Second, you do not have to make monthly payouts. In other home loans, income is important because it would determine your ability to repay the loan. The key payment method of other home loans is monthly payouts.

Increasing debt, declining equity

In forward home loans, your aim is to have full ownership of you home, so you reduce your debt. Eventually, when all your debt is paid, you will have full ownership of your home. The purpose of reverse mortgage is the opposite of that of forward home loans. In reverse mortgages, you are trimming down or giving up a portion of your home equity in order to secure or obtain money. Thus, your debt increases, while your home equity declines.


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