Our team at Harbor Mortgage Company has extensive experience in the home lending industry, and we receive questions about all kinds of mortgages. One type of mortgage that you may have heard of is the reverse mortgage. In this article, we’ll provide a brief overview of what reverse mortgages are and how they work.
A standard mortgage involves a bank (or other lender) loaning you money to pay for the cost of a house, which you are then required to pay back over time. A reverse mortgage is a different type of loan that allows seniors to borrow from their home equity to receive tax-free monthly payments to supplement their retirement income. In this arrangement, you’re required to pay back the loan only when you move to a new residence or pass away, in which case your heirs can sell the home back to the bank to cover the debt.
In other cases, though, many borrowers use these reverse mortgages to cover home repairs or other expenses without having to use high-interest lines of credit. You can also use them to buy a new primary residence, which is known as a reverse purchase. This makes it easier to downsize to a smaller residence, should you choose to do so.
If you have further questions about reverse mortgages or whether they are right for your situation, we encourage you to give our team a call.