What is a Reverse Mortage?
A reverse mortgage is a loan against real estate that requires no repayment as long as you live in the property.
In a forward mortgage, which is what a traditional mortgage is called, you repay the loan that causes your debt to decrease while the equity (the amount your property is worth minus anything you owe) increases. In a reverse mortgage the exact opposite happens. Equity is removed from your property either in one lump sum or through monthly payments, which increases your debt. The debt is paid off when the property is sold.
There are two types of reverse mortgages. One is backed by HUD, and the other by Fannie Mae. To find out more information about each, go to HUD’s and Fannie Mae’s websites.
Tags: reverse mortgage
