Can You Refinance a Reverse Mortgage Loan?
@khariwashington How does a reverse mortgage work? ##mortgagetips ##personalfinance ##realestate ##reversemortgage ##conventionalmortgage
♬ original sound – Khari Washington
A lot of people have heard the term reverse mortgage, but have no clue what it is. A reverse mortgage is simply a mortgage in which the homeowner doesn’t have to make any payments during the life of the loan. However, there is no free lunch and all the interest accrues and is added to the principal balance of the loan. This loan is for people sixty two and over, and it allows them to qualify with very little income since they don’t have to make payments. However, they do need to have enough equity to allow that interest to grow. The bank only gets their money back if the person moves or if they pass away. The ideal situation for the bank is that there’s actually equity when the person moves out of the house and the family. Are they any different after the principal and interest is paid at the home? Value is actually lower than the principal interest. Then the bank sells the home and will take some type of loss. That’s how a reverse mortgage works.