What Is a Reverse Mortgage Loan?
A reverse mortgage is a special type of loan available only to older homeowners with full or nearly full equity in their homes. Such owners can borrow against the equity they have built up over the years, but no repayment is necessary until the borrower sells the property or moves elsewhere. If the borrower dies before the property is sold, the estate repays the loan (plus any interest that has accrued. These loans have become increasingly popular. If you believe you qualify for such a loan, be sure to have the document reviewed by an attorney or financial advisor. 4.2.
A reverse mortgage loan is a special type of mortgage loan for seniors (generally age 62 and older) that pays a homeowner loan proceeds drawn from accumulated home equity. Unlike a traditional home equity loan or second mortgage loan, no repayment is required until the borrower(s) no longer use their home as their principal residence. Interest on a conventional loan is calculated as simple interest while on a reverse mortgage the interest is calculated as compound interest. Reverse mortgage loans were generally introduced in the market in 1989 with the U. S. Department of Housing and Urban Development (HUD) sponsored, FHA-insured, Home Equity Conversion Mortgage (HECM). The HECM is one of the most common types of reverse mortgage loans. In Massachusetts the Term Reverse Mortgage has been available since 1983 from more than 68 lenders, banks and credit unions across the state. Additional information on the HECM reverse mortgage loan is available at the following link to the HUD website
