Menu

Why is it Called a “Reverse Mortgage”?

Let’s examine exactly what the term reverse mortgage means and how it works differently from a traditional mortgage. When you make a payment on your traditional mortgage, the balance goes down up an infinitely small amount each month. But with the reverse mortgage, you don’t need to make a principal and interest payment, so each month; the balance goes up an infinitely small amount. This is called reverse amortization.

Let’s see how reverse amortization works in a reverse mortgage. A senior homeowner borrows 50% or less of the value of their home with a reverse mortgage. That means that the homeowner is getting a home appreciation on a value twice the amount of interesting curve on a reverse mortgage.

At 4% appreciation, the average appreciation rate nationally since 1960 also means that the home’s value is typically growing faster than the loan balance. The net result is a home’s equity can increase even though the principal and interest payments are not made. So, a portion of the home’s appreciation can cover the carrying cost of the mortgage, turning appreciation into cash flow. To find out more, call us today!

Discover how the H4P (Home Equity Conversion Mortgage for Purchase) can boost your real estate business while providing exceptional value to your senior clients.

Please provide the following details, and you will receive a direct link to the webinar recording:

*You can be 100% sure we will never ever sell your contact information.