A reverse mortgage is a financial tool that allows older homeowners to draw on the equity in their homes as a means of paying for various other living expenses. In recent years, a growing number of Texas residents have opted for reverse mortgages as a way to finance their retirement. A reverse mortgage is, as the name might suggest, much like a typical mortgage loan in reverse. Instead of making regular monthly payments to the lender, the owner of a property may receive monthly payments from the lender by drawing against the equity in his or her homestead property. With a regular mortgage, one’s balance or payoff is reduced with each monthly payment. With a reverse mortgage, the balance or payoff grows larger with each monthly advance of funds to the homeowner and/or the application of related fees. When the homeowner leaves the home (either because they choose to sell it, or because they have passed away), the balance becomes due and payable.
What is a reverse mortgage loan?
October 3, 2013 by