Need to Know About Reverse Mortgages In simple words, it is a loan for senior citizens whose age is 62 or older. Basically, this loan allows converting home equity into cash income. The senior citizens who are retired and need to run their daily expenses opt for this plan because in this the bank pays to them in exchange for their property per month, and after a few years, when the money of the property is fulfilled by the bank the ownership of the house gets transferred to the bank. These are the alternatives to pensions. This is all About Reverse Mortgages.
How does it work? In this process, the owner of the house doesn’t pay the lender; the lender pays the house owner. If the senior citizen dies in the middle, the bank asks their legal heirs to pay off the debt and transfer the ownership in their name or simply sell the house. If the house gets sold for more money than the loan amount, the excess money gets transferred to the legal heirs. These are not taxable. It may feel like an income to the owner, but under IRS (INTERNAL REVENUE SERVICE), it is considered as a loan in advance, which is paid by the bank. All