Reverse Mortgage is a different kind of loan available
to aged people or senior citizens. In this type of the loan
agreement the borrower gets one lump sum amount or multiple
payments equivalent to his or her home or residence cost.
This amount is not returned or repaid to the lending institution
instead the house is sold if the borrower dies or leaves
the home.
In normal mortgage agreement the home owner pays EMI which
increases the equity in his home every month. At the time
of final settlement the lending institute receives the principal
and the interest thereon and the home is completely debt
free. In Reverse Mortgage the owner of the house gets money
from lending institution but does not repay. The interest
is added to the lien of the property.
If the property value increases after a reverse mortgage
is settled, it is possible to obtain another Reverse Mortgage
over the increased equity in the property.
Generally the citizens over the age of 60 are eligible
for Reverse Mortgage. This way of raising funds by mortgaging
the residence with No Repayment option is becoming popular
now a day.
