What is a reverse mortgage loan?

Reverse mortgage definition: “A type of mortgage in which a homeowner can borrow money against the value of his or her home.”

Reverse mortgage explained: A reverse mortgage enables older homeowners (62+) to borrow against the equity in their homes, without requiring them to give up title, sell the home (you may have to sell the home to repay the debt and there is a possibility of foreclosure) , or take on a monthly mortgage payment (borrower is responsible for paying taxes and insurance). In a reverse mortgage, the payment stream is ‘reversed’ – instead of monthly payments to a lender, a lender makes payments to the homeowner, either through a line of credit, lump sum, or monthly installments.

Many reverse mortgages are regulated and insured by the Federal Housing Authority (FHA); insured reverse mortgages are also known as Home Equity Conversion Mortgages (HECM) (borrower pays premiums for this insurance). Proprietary reverse mortgages are not federally insured and are designed by financial institutions, though they may benefit borrowers with higher home values.

What are reverse mortgages for purchase?

A reverse mortgage for purchase allows seniors to purchase a new principal residence and obtain an HECM mortgage within a single transaction, eliminating the need for a second closing. Find out more here.