If you are wondering what a reverse mortgage is ,it is a loan. This loan ideally targets those home owners who are over 62 years of age and have home equity. What happens such home owners borrow money of equal value to their homes and will always receive some funds in lump sum or fixed monthly payments. Ideally you may not even be required to pay the loan. The loan balance is due only when the borrower dies. In most cases the financial institutions will structure the payment in such a way that your payment will not go beyond the value of your home. Therefore in the event the loaned money will be more than the borrowers home value it is the lender to suffer the loss and the borrower will not be held accountable for the loss. This is to ensure that the interest of the borrower is well taken care of. As such the lenders are keen to check the factors that may lead to such a scenario like the value of homes in the area going down or the borrower living more than anticipated.
Therefore when a home owner takes a reverse mortgage he is not the one to pay the lender but it is the lender who will be paying the home owner. Furthermore the home owner has the freedom to decide how he or she the payments to be given to him or her. In addition the home owner will have the home ownership document until he or she is dead and the lender can now take the property. Mostly if the homeowners heirs decide to pay the mortgage loan the lenders cannot deny them the opportunity. Once the heirs pay the mortgage they will be allowed to keep the home after the death of the owner.
It is good to also note that proceeds got from reverse mortgages are not taxed which is great advantage of taking a reverse mortgage. This added to the fact that you will not be required to make monthly loan payments make reverse mortgages the best option for those seniors who d not want these monthly commitments.
There are several types of reverse mortgages that are at your disposal. These options include term payment and a line of credit, fixed monthly payments, as well as a line of credit mortgage type. All these have specific and unique advantages, terms and conditions and it is important that you consider each of them carefully before making a choice. However any of them will guarantee that your last days are full of comfort and o financial struggles.