So How Do reverse mortgage loans Work? To qualify for a reverse mortgage, you must be at least 62 years of age and own a home. If you have equity in your house and you are looking for additional cash flow, a reverse mortgage loan may provide the funding you need while allowing you to stay in your home.
According to the AARP, a reverse mortgage is a loan you borrow against your home that you don’t have to pay back for as long as you live there. For many older Americans, the opportunity to convert the equity in their homes into cash, with no repayment required until they die or sell the home, sounds appealing.
Here’s how the strategy works: Take out a reverse mortgage line of credit as early as possible — homeowners are eligible at age 62 — and set it aside. If the stock market turns bearish, draw from.
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A reverse mortgage does just the opposite. Your balance increases over time as you access the equity stored up in your home. After reviewing how much equity is in your home, a reverse mortgage lender will give you cash in a lump sum, as monthly income or a combination of both.
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If I have a reverse mortgage loan, will my children or heirs be able to keep my home after I die? It depends. If you have a Home Equity conversion mortgage (hecm) your heirs will have to repay either the full loan balance or 95% of the home’s appraised value-whichever is less.
A reverse mortgage works by allowing homeowners age 62 and older to borrow from their home’s equity without having to make monthly mortgage payments. As the borrower, you may choose to take funds in a lump sum, line of credit or via structured monthly payments.
What Heirs Need to Know About Reverse Mortgages Death of the borrower triggers the loan payoff, but the estate and heirs will never owe more than what the home is worth. Thinkstock
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There are many factors to consider before deciding whether a reverse mortgage loan is right for you. The information below will assist you with the question of, "How does a reverse mortgage work" as well as outline the steps needed to access your home’s equity.