The reverse mortgage is a form of loan which is mostly commonly available to senior citizens. First popularized in Europe, a reverse mortgage allows a lending institution to lease the equity an elderly homeowner has built up in his or her home. The homeowner takes out a loan from the lending institution, which he or she is not obligated to pay until after he or she dies. When the home is sold, the loan is paid to the lending institution.
The Benefits of a Reverse Mortgage
The major benefit of a reverse mortgage is that it allows the borrower to have an income without having to pay off the debt during his or her life. The money can be taken in a lump sum payment, or a regular payment plan.
If the property the mortgage is taken out on has increased in value, it may be possible for the homeowner to take out additional loans.
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