Article: Reverse Mortgage Explained
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Reverse Mortgage Explained
Can't remember how many times I've been asked "What is a
reverse mortgage"? Reverse mortgages are a great way to get a
loan using your primary asset. As in all cases of financial
lending, the flexibility comes at a price. A reverse mortgage is
a loan using your house and is referred to as a "rising debt,
falling equity" kind of deal.
To compare reverse mortgage to a more traditional one, the type
of mortgage commonly used when buying a house can be classed as
a "forward mortgage". To qualify for forward mortgage, you must
have a steady source of income. Because the mortgage is secured
by the asset, if you default on the payments, your house can be
taken from you. As you pay off the house, your equity is the
difference between the mortgage amo...
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