How is a reverse mortgage different from a bank home equity loan?
• Simple, a reverse mortgage does not need to be paid back as long as you remain in the home and a home equity loan will require monthly payments until the loan is paid off. • In most cases where cash flow is of short supply, a home equity loan only adds to the monthly cash flow shortage and is a short term solution. • Your home could be foreclosed upon if you were not to make your home equity payments, but since you don’t make payments with a reverse mortgage, you can’t be asked to leave as this is a non-recourse loan. • A non-recourse loan means you can never owe MORE than the market value of the home, regardless of how much money you’ve used with the reverse mortgage. • FHA insures their loans with mortgage insurance to protect the homeowner from this happening.
