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. No repayment of the principal or interest is required until the borrower dies or the home is sold.”
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, or take on a monthly mortgage payment. 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.
Virtually all reverse mortgages are regulated and insured by the Federal Housing Authority (FHA); insured reverse mortgages are also known as Home Equity Conversion Mortgages (HECM). 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.