manu
Joined: 24 Aug 2007
Posts: 2
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| Posted: Fri Aug 24, 2007 6:39 am Post subject: Reverse mortgage |
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:lol: 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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