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Loan Products |
>> Reverse Mortgages |
A Reverse Mortgage is a special type of home equity loan that allows seniors to convert some of the equity in their homes into cash while still retaining home ownership.
 Reverse mortgages work much like traditional mortgages with one important exception: instead of you making a mortgage payment each month, the lender pays you.
Unlike conventional home equity loans, most reverse mortgages do not require any repayment of principal, interest, or servicing fees for as long as you live in your home. Funds obtained from these loans may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel, and maintenance costs.
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What Are the Costs Involved?
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The costs associated with getting a reverse mortgage include the origination fee (which can usually be financed as part of the mortgage), an appraisal fee, and other charges similar to those for regular mortgages.
The money provided to you from a reverse mortgage is tax-free; it is not income that you must pay taxes on.
Reverse mortgage programs also collect funds from insurance premiums charged to borrowers. Senior citizens are charged 2 percent of the home's value as an up-front payment plus one-half percent on the loan balance each year. These amounts are usually paid by the lender and charged to the borrower's principal balance.
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