There are hundreds, if not more, different types of home loans available today. Most home loans result in you putting up your home’s equity in exchange for money. You then make monthly payments to the lender to pay back the money and in turn slowly build your home’s equity back up. With a reverse mortgage home loan the terms are the exact opposite. You receive a cash amount using your home’s equity, but you don’t pay the money back like a traditional home loan. Instead, you keep the money until you die, sell the home or no longer live in it.
Qualifying terms for a reverse mortgage home loan is different than the terms for a traditional type mortgage. For a reverse mortgage you won’t be making payments so you don’t need to show proof of income. You don’t even need any type of income to qualify. Traditional mortgages require you to make payments and if you fail to make them you could lose your home. With a reverse mortgage there are no payments so there is no worry about losing your home.
Fees are still involved when getting a reverse mortgage. Expect to see an origination fee, service fees, appraisal fees and others depending on your lender. Most of these fees can be financed and applied to the mortgage so you won’t come up with out-of-pocket expenses.
To get a reverse mortgage you will follow the steps of any other type of home loan. First you find a lender and learn their terms. Fill out any application forms to start the loan process. An appraisal will then be made on your home to determine the value. Next you and the lender will come to an agreement of terms for payment options, loan interest rates, etc. After approval of the loan from the lender you will then sign all paper at the closing. The money is then paid to you in the form of payment you chose. The money can be received as cash in a lump sum, a credit line with terms you set or as a monthly payment to you. Repayment can then be made by your heirs/estate after your death, when you sell the home or when you no longer live in the home.
You can learn more about home loans in our Arizona Real Estate section.
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I think i need more information on reverse mortgage. Could you kindly write more on it on the next post? Thanks. Much appreciated.
Here in the UK this isn’t so easy. The latest credit crunch has left a lot of borrowers with fewer lending options. With lots of lenders now unable to borrow from other lenders the consumer is being affected. Even prime mortgage lenders are only giving out 65-70% LTV mortgages. And a a reverse mortgage? You must be joking. The lenders are staung well away from those right now.
The US marketing is getting more difficult as well and taking out a reverse mortgage now will cost you 20-40% of the property value. People would be better off waiting to see if any kind of economic recovery can be made in the housing market.
Very informative post. I am searching about this mortgage scheme and google directed me to this page. I am researching on this mortgage’s advantages and disadvantages which is easy to find for the homeowners and I cannot find one in the part of the mortgage agency… so bad.
Anyway, thanks for this informative post of yours.
Good thing that a lot of writers pay attention on writing about mortgages. The thing is, different types of mortgages have different advantages for different people. Thanks for posting this additional info..