What is a reverse mortgage?

Reverse mortgage is an option to take loan using your property as security and is also defined as a "rising debt, falling equity" deal.

Difference between forward mortgage and reverse mortgage:

While applying for a forward mortgage you need a regular source of income. This loan is secured on the basis of asset, therefore, if you make any mistake while repaying the payment, you can loose your home.

How one can use reverse mortgage?

You can use the funds of your reverse mortgage according to your wish. Generally people use reverse mortgage for the following purposes.

1) To repair or modify home.

2) To cover health care expenses.

3) To clear all debts.

4) To pay property taxes.

5) To take a vacation.

Requirements from an applicant while applying for reverse mortgages:

a) Age factor plays a major role. (Older the applicant, higher the amount of credit)

b) Applicant should owe a home of his own.

c) No need of proof regarding employment or salary.

d) No medical certificate is required.

Payment Options

You can choose one of the following methods as payment option

1) You can receive money from reverse mortgage in the form of fixed monthly payments for rest of the life.

2) Most popular option to receive money from a reverse mortgage is line of credit. More than 55% borrowers use this policy.

3) You can even use the combination of both.

Advantages of Reverse Mortgages:

1) You can repay it any time according to your wish.

2) Reverse mortgage is an easy method of converting equity of your home into a tax-free income without selling the home.

Recommendations for you before you go to apply for reverse mortgage:

Before you apply for reverse mortgage, you are requested to visit a counselor. The counselor will advise you on the advantages and disadvantages of reverse mortgage and if it is suitable for you.

Find more about Mortgage from Experts on http://www.LeanderNet.com/Mortgage/Mortgage.php

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