If you are wondering what a reverse mortgage is ,it is a loan. If you are a home owner with a considerable home equity and aged above 62 years then you are eligible for a reverse mortgage. In this cases such a home owner can be loaned money that is equivalent to the value of his or her home and then get the funds as fixed monthly payments or a lump sum amount. Ideally you may not even be required to pay the loan. When you die that is when your entire loan becomes due for payment. 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. As such if your loaned amount exceeds the value of your house you will not be held responsible and it will loss on their side of the borrower. This is to protect the interests of the borrower. As such since the value of homes going down and the borrower living for more years than anticipated are some of the reasons that could lead to this loss the lenders will always make an accurate assessment before giving you the loan.
Therefore with reverse mortgages the loaners are not the ones who pay the loan rather it is the lenders who pay them. 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. When this happens the heirs will keep the home after the home owner dies.
Ideally you are encouraged to take or give a reverse mortgage since its proceeds are not taxed. 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.
For those who are looking of reverse mortgages there are different types that they can consider. Among these alternatives are those that will give you equal monthly payments, a line of credit as well as those which have a term payment and a line of credit. Since all these have different terms and conditions it is paramount that home owners take time to check evaluate these terms before making a decision to take one over the other. Whichever the reverse mortgage you take your old age will be well taken care of.