A reverse mortgage is a loan product that allows homeowners 62 years of age and older to use their equity to generate tax-free income, without having to sell the home or take on a new mortgage payment. In fact the reverse mortgage is exactly what the title states, the reverse of a standard mortgage. With a standard mortgage, the borrower (or homeowner) makes monthly payments to the lender (or bank or mortgage company), in order to pay back the loan that the lender originally lent to for the purchase or refinance of the house. This payment includes interest that the lender charges the borrower for the loan. In a reverse mortgage, the situation is reversed; the lender makes monthly payments to the borrower. However, in both a standard and reverse mortgage, the lender secures their loan amount by using the house as collateral.
For older Americans contemplating a stress-free retirement, the reverse mortgages may be just the option! Just make sure that you know your options and goals and how a reverse mortgage works. To have more peace of mind, you can also enroll in Medicare. You are entitled to enroll in a Medicare supplemental insurance program if they are over 65, disabled and under 65, or if they have End-Stage Renal disease where hospice care can be provided.