Reverse Mortgage
A Reverse Mortgage, also called a Home Equity Conversion Loan, allows seniors to tap into the of their property in the form of either:
• line of credit
• annualized installments
• lump sum upfront payment
A reverse mortgage helps seniors receive income in exchange for equity converted into debt. It is an option currently available for people 62 years or older in the US and UK, or 55 years or older in Canada and Australia. Similar to a home equity loan or line of credit, the cash also comes from a loan based off the home’s equity. One major difference is that repayments, to the bank, are not required until the borrower stops occupying the home as the
The homeowner can make voluntary monthly payments or sell the home and repay the debt. If the borrower passes, the heirs can either pay off the loan from other sources and keep the house, or relinquish the house and keep any proceeds. If it is your goal to leave your kids a home that is free and clear, you will want to find another solution besides a reverse mortgage. On the other hand if you feel like you’ve provided for your kids by raising them and teaching them to be independent, and they do not expect or want you to leave them your home free and clear. Then a reverse mortgage might work for you.