Since each plan differs slightly, it is important to choose the one that best meets your financial needs. The reverse mortgage is not without risk and negative aspects. Knowing the pros and cons will help you acquire the best possible deal should you decide to go with a reverse mortgage. Staying informed of your rights and responsibilities as a borrower may help to minimize your financial risks and avoid the threat of losing your home. A reverse mortgage is a type of home equity loan that allows you to convert some of the equity in your home into cash while you continue to own the home.
Reverse mortgages operate like traditional mortgages, only in reverse.
Rather than paying your lender each month, the lender pays you. Reverse mortgages differ from home equity loans in that most reverse mortgages do not require any repayment of principal, interest, or servicing fees as long as you live in the home. The reverse mortgage s benefit is that it allows homeowners who are age 62 and over to keep living in their homes and to use their equity for whatever purpose they choose. A reverse mortgage might be used to cover the cost of home health care, to pay off an existing mortgage to stop a foreclosure, or to support children or grandchildren. But willing lenders may still be scarce in some places.