- The person who takes out a reverse mortgage has to be at least 62 years of age. If a couple takes out the reverse mortgage, both of them have to be at least 62 years of age. The lender doesn't allow anyone to take over the reverse mortgage without paying off the loan. This is because the lender seizes the property as payment when the person who takes out the mortgage dies, moves out or decides to sell the property.
- When he lives in the property, the homeowner can take out as much money as he wants as long as his loan balance doesn't exceed the market value of his home. If the home value increases, the homeowner can refinance to increase his loan limit to match the new home value. This ensures that the lender can cover his debt by selling the property. When the homeowner dies, permanently moves out or decides to sell his home, the property belongs to the lender.
- If the homeowner or his heirs don't pay off the reverse mortgage balance, the lender sells the property. The lender takes the sale proceeds to cover the loan balance of the homeowner. If there is any remaining amount after deducting his debt, the lender gives it to the homeowner or his heirs. The homeowner or his heirs never have to pay the lender anything because the loan balance doesn't exceed the home value.
- A reverse mortgage is ideal for a homeowner who doesn't want to pass on his home to his heirs. If he wants his heirs to take over the property after his death, he should consider other loan alternatives. A reverse mortgage often comes with high fees and charges, making it expensive if the homeowner or his heirs have to pay off the balance.
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