Massachusetts Discount Mortgage - Consumer Direct

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Reverse Mortgage Information

A reverse mortgage is a loan against your home that you don’t have to repay as long as you live there.

When you purchased your house you had a regular or forward mortgage (15 year, 30-year, adjustable rate, etc.), and as you made your monthly loan repayments your mortgage debt continued to go down over time until you’ve paid it all off or lowered it significantly. Meanwhile, your equity is rising as you repay your mortgage and as your property value continues to appreciate over time.

With a reverse mortgage, you go full circle. Now you receive money, lump sum, monthly payments, credit line or a combination of all three. Now you get the money in reverse. Interest on the money will continue as you keep getting cash advances, make no repayment, and the interest is added to the loan balance (the amount you owe). That’s why reverse mortgages are called rising debt, falling equity loans, however, keep in mind that your homes equity also should continue to appreciate over time.

Think of it this way. In a regular or forward mortgage, you use the debt to turn your income into equity. In a reverse mortgage, you use the debt to turn your equity into income. You are reversing the process you used to buy your home. So when you started, you had income and wanted equity. But now, you have equity and want income. In both cases, you can use the debt to turn what you have into what you want.  Information on reverse mortgages in Delaware and other states is available online.

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