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The Mortgage Bankers Association (MBA) recently made a preemptive strike against what it obviously perceives as the next threat against the mortgage industry - "suitability standards." Read more...

 

The Need For A Reverse Mortgage Definition

There are several definitions for reverse mortgage, but all of them, in different terms claim that a reverse mortgage is a type of mortgage in which a homeowner can borrow money against the value of his home.

From this reverse mortgage definition there are a few things that must be point out. First of all, it is important to know that this particular type of mortgage applies to elder people. In conclusion, in order to benefit from it, the borrower must be a senior of at least 62 at age.

A reverse mortgage works much like a traditional mortgage, only in reverse. This means that instead of making a payment to the lender each month, the lender pays the borrower. This is another important part of the reverse mortgage definition. The amount of money that the lender pays is the choice of the borrower, and it may come as a lump sum or a regular monthly payment, depending on the specific need.

The advantage of a reverse mortgage is that no repayment is required until the borrower is deceased or the home is sold. Because no payment is required, the borrower's credit is not relevant and often unchecked. However, this type of transaction will be structured so that the loan amount will not exceed the value of the home.

In most of the cases, lenders require that there are no other liens against the home, but if they do, they must be paid-off through the proceeds of the reverse mortgage.

In conclusion, the reverse mortgage definition explains that it is a great opportunity for elder people who have a limited income but a good home equity, to enjoy their golden years. It is also a good way for them to free up money for unaffordable purchases, like vacations or home improvements or other urgent expenses.

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