With a traditional mortgage, you qualify and borrow a large sum of money based on such factors as your income, job history and credit worthiness.  The lender wants to make sure that you will be able to repay the loan by making monthly installment payments.  If payments are not made, the lender can foreclose and you could be forced out of your home.

 

The reverse mortgage works quite opposite from a traditional loan. You are not required to make monthly payments.  A reverse mortgage is seen truly as a collateral loan, with only one payment required.  This payment is made either when you move, sell or die.  It can be paid from the sale of the house (remaining equity goes to you or your heirs) or your heirs may choose to refinance and keep the house.

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Difference between Traditional vs. Reverse Mortgage

• No monthly payments.

• Use the money however the borrower(s) desire.

• Loan must be repaid when borrower(s):

  • Move

  • Sell

  • Refinance

  • Die