Reverse mortgages are loans. This loan ideally targets those home owners who are over 62 years of age and have home equity. In this cases such a home owner can be loaned money that is equivalent to the value of his or her home and then get the funds as fixed monthly payments or a lump sum amount. Contrary to other types of mortgage loans there is no law compelling you to make any payment of the loan. When you die that is when your entire loan becomes due for payment. To ensure that they do not make losses lenders make sure that your loan is structured in a way that the payments given to the borrower will never go above their houses’ value In the even the borrowers loaned money become more than what their home is worth then they will never be held responsible and the lender will have to suffer the loss. The purpose of this is to ensure that your interests as the borrower have been protected. As such the lenders are keen to check the factors that may lead to such a scenario like the value of homes in the area going down or the borrower living more than anticipated.
Therefore when a home owner takes a reverse mortgage he is not the one to pay the lender but it is the lender who will be paying the home owner. Also the homeowners are free to choose the mode of payment by the lender. In addition it is the home owner who also maintains the title deed of the property until when he or she dies. Ideally the homeowners heirs may decide to pay off the mortgage loan. Once the heirs pay the mortgage they will be allowed to keep the home after the death of the owner.
Ideally you are encouraged to take or give a reverse mortgage since its proceeds are not taxed. This added to the fact that you will not be required to make monthly loan payments make reverse mortgages the best option for those seniors who d not want these monthly commitments.
For those who are looking of reverse mortgages there are different types that they can consider. You can choose to take a line of credit reverse mortgage, equal monthly payments, or even term payments and a line credit. Due to the difference in their terms ,conditions benefits and even payments if it important for a home owner to study each of them carefully so that they choose the one that best suits his needs. Whichever the case a reverse mortgage will make your last days comfortable.