What is the difference between a reverse mortgage and a standard mortgage?
Just wondering what a reverse mortgage is.
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Simply stated, mortgage is a loan to purchase a house, which is paid off over many years and costs many thousands af dollars in interest over the life of the loan. Once the mortgage is completely paid off, the house is property of the morygagee, or homeowner.
A reverse mortgage is a type of home equity loan in which the homeowners receive a loan in the form of monthly payments, and the loan is paid off when the borrower dies or moves out of the house.
In a reverse mortgage, a person, in a sense sells a portion of the value of the home and receives monthly payments. The owner plays the part of the bank and the other party plays the part of the borrower, so it is like a mortgage in reverse, hence the name. When the house is sold, the borrower is entitled to a share of the money received.
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