Reverse Mortgages - Cleveland Ohio Mortgage

Reverse Mortgages at Cleveland Ohio Mortgage

Definition – Reverse mortgages are designed specifically to help senior homeowners tap into their home equity to help fund retirement living expenses. Reverse Mortgage Information notes that a reverse mortgage is a "non-recourse" loan meaning that no matter how large the loan balance grows, the borrower (or estate) can never owe more than the market value of the home. Typically, the loan is paid off from proceeds of the sale of the home.

Advantages – The biggest advantage of a reverse mortgage is that there are no monthly payments required - the loan (together with accrued interest) is paid only when the homeowner dies, sells the home, or moves out permanently. The most popular type of reverse mortgage (HECM - Home Equity Conversion Mortgage) is federally insured by the FHA. Also, things like credit scores, documented income, and other factors important in qualifying for a traditional mortgage are unimportant when it comes to reverse mortgages. The loan is secured solely by the equity built up in the home.

Disadvantages – Reverse mortgage loans are only available to homeowners age 62 and older. Also, reverse mortgages have stiff upfront costs - often 10% or more of the loan amount. Reverse mortgages are "rising debt" loans meaning that the estate left to heirs is reduced. You can qualify for a reverse mortgage only if your home mortgage is paid-off or has a small balance remaining. Reverse mortgage lending is somewhat specialized.