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There has been alot of talk over the past few years about Reverse Mortgages.  Several aging, but very reconizable, actors have been hired to tout the upside of reverse mortgages to the 62 year and older population.  This week we will look at what a reverse mortgage is and talk about the pros and cons.  Today we're starting off with the definition and how it works.

HOW DOES A REVERSE MORTGAGE WORK?

A reverse mortgage is a type of home equity loan that allows you to convert some of the equity in your home into cash while you continue to own the home. Reverse mortgages operate like traditional mortgages, only in reverse. Rather than paying your lender each month, the lender pays you. Reverse mortgages differ from home equity loans in that most reverse mortgages do not require any repayment of principal, interest, or servicing fees as long as you live in the home.

The reverse mortgage’s benefit is that it allows homeowners who are age 62 and over to keep living in their homes and to use their equity for whatever purpose they choose. A reverse mortgage might be used to cover the cost of home health care, to pay off an existing mortgage to stop a foreclosure, or to support children or grandchildren.