Reverse Mortgage Definition

A reverse mortgage gives senior citizens ages 62 or older financial peace of mind when the monthly debt is more than the income. The reverse mortgage does not require a credit check or a repayment schedule. The reverse mortgage borrower must use the home as his primary residence and have between 40 to 80 percent equity in the home. The reverse mortgage lender pays the equity in one of three ways. The reverse mortgage recipient can receive a line of credit, one lump sum payment or monthly installments. The reverse mortgage lender charges interest on the money. The amount of the reverse mortgage depends upon the age of the reverse mortgage borrower, the equity in the home and any existing liens on the property. Repayment of the reverse mortgage occurs when the house is sold or the reverse mortgage borrower moves out of the premises. In the case of death, the reverse mortgage becomes the responsibility of the reverse mortgage recipient’s heirs. The property may be sold or the heirs pay the amount of the reverse mortgage and the interest. The amount of interest charged for the reverse mortgage varies by reverse mortgage lenders.

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