Define Reverse Mortgage

A reverse mortgage is an FHA insured mortgage that helps home owners, especially senior citizens, reduce their mortgage payments. Reverse mortgage companies advertise on television and are listed on the Internet. Just search on “reverse mortgage.”

When entering into a reverse mortgage, the mortgagee guarantees some amount of his equity to the reverse mortgage company. This assures the reverse mortgage company profits from the reverse mortgage over time. Reverse mortgage companies, in return for equity, pay the reverse mortgage borrower a lump sum amount or a reduced monthly mortgage payment. This can be very helpful for reverse mortgage borrowers who are living on social security payments. The government mandates reverse mortgages to ensure reverse mortgage companies are working within the law and not taking advantage of reverse mortgage borrowers.

It’s a good idea for reverse mortgage borrowers to discuss the reverse mortgage with family members before entering into an agreement.

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