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A reverse mortgage is a loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments.
The homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (i.e. into aged care).In a typical mortgage the homeowner makes a monthly amortized payment to the lender; after each payment the equity increases within his or her property, and typically after the end of the term (e.g. 30 years) the mortgage is paid in full and the property is released from the lender.
In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. If the owner receives monthly payments, then the debt on the property increases each month.
If a property has increased in value after a reverse mortgage is taken out, it is possible to acquire a second (or third) reverse mortgage over the increased equity in the home. But in certain countries (including the United States), a reverse mortgage must be the first and only mortgage on the property.
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Forclosure is not possible with a normal reverse mortgage. There are no payments to be made. It is basically a home equity loan that is repaid from the borrower's estate upon the borrower's death, or once they no longer live in the home (i.e. move to a nursing home, etc.). Heirs have the option of repaying the loan if they want to be able to inherit the home. Also lenders are not allowed to lend more than a certain percentage of the home's worth (I think up to 2/3 of the home's value).
It seems like it's only good for the lender but for some, it's a viable way to turn a lot of debt into a cash source, and in these times, a lot of people need that
[url]http://www.mandtreversemortgage.com[/url]
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Depends on your situation. It is definitly in my plans for when I turn 62. Right now I plan on selling this house and buying something smaller. Paying cash for the smaller house and then pulling out most of it with a reverse mortgage. Then investing that money in something VERY conservative so it wil last a LONG time. I havent worked out the details but thats the plan. .
I dont plan on leaving anything to anybody so I really dont care if the house goes to some bank when I go. The women in my family tend to live a long time. The men in my husbands family do not. Im an only child. I just lost my Mom. That was the last of my relatives except for some distant cousins. We have no kids and my Outlaws treat me like crap..
Also when Im 102 and go in the nursing home there wont be any house to take cause I will have already spent it.
Last edited by Cecilia_Rose; 10-16-2008 at 07:38 AM..
Reason: Old people should not have to eat cat food just so their kids can inherit the house.
With the reverse mortgage program, there's no reason for a senior citizen home owner to try and live on only social security. Many seniors are cash poor but asset rich. The RM program is a great way to to take out equity with no pay back until you move or die.
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I noticed that too. But it doesnt make any difference. Its still a valid topic for discussion.
A reverse mortgage is like any other mortgage. You can get hosed if you dont pay attention. You should check all the variables and get the best deal for you just like you would a regular mortgage.
Also I expect the bank to make some money on the deal. Thats only fair.
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