For many seniors (and their children who are care-givers), a reverse mortgage can provide very welcomed way to provide needed monthly income. However, reverse mortgages require caution. Below are some details that may help you if you are considering such a thing.
A reverse mortgage is essentially a loan against your home that you do not have to pay back for as long as you live there. It allows homeowners age 62 or older to borrow cash from the equity in their homes without having to make monthly payments.
Reverse mortgages allow homeowners to receive either cash in a lump sum or through monthly payments, as a line of credit, or any combination of these options. Unlike traditional mortgage products, homeowners do not make any monthly payments to the lender. However, they or their estate eventually do have to repay the principal and interest when they move, sell the house or pass away. And because no monthly payments are being made, the amount owed will grow over time as interest costs build up and, in some cases, as additional funds are advanced.
Remember that a reverse mortgage is a loan that must be repaid. And, in addition, the borrower also is still responsible for paying the property taxes and insurance and maintaining the house. Failure to do so can cause the reverse mortgage to become immediately due, payable in full.
Want to read more? Read the entire FDIC Consumer News article on Reverse Mortgages. You may also go to our Online Mortgage Center and arrange to talk to a Peoples Bank mortgage loan officer. Or call our Customer Service center, 877.802.1212 (between 8 am and 7 pm, Monday – Friday) to arrange for an appointment.