A reverse mortgage, also called the Home Keeper mortgage, you borrow against the value of your home and receive loan proceeds according to the payment plan that you select. Unlike a traditional home equity loan, you do not repay the loan until you sell the home, and which time you owe the lender the accrued interest plus any cash you have taken out. Home Keeper Reverse Mortgages are used most frequently by senior citizens.

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The borrower typically chooses from three payment options: 1) one lump sum in cash, 2) equal monthly payments for as long as both borrowers live in the home, or 3) equal monthly payments over time. Repayment is not required until both borrowers move, sell their home, or are deceased. At that time, the lender may exercise its security interest and foreclose on the property or the owner or the heirs of the owner may pay the lien off. Naturally, heirs may object to a reverse mortgage for that reason.

Like any other loan, a reverse mortgage accrues interest charges, beginning when the first payment is made to the borrower. Usually a reverse mortgage is an Adjustable Rate Mortgage (ARM), with interest compounded monthly.

Reverse Mortgages can be difficult and expensive. Man people will want to find an alternative to a reverse mortgage. The next best thing is a home equity loan. If the home is worth more than is owed, a home equity loan can give the homeowner the equity in cash. If you are considering a reverse mortgage, a home equity loan might also work for you.



John is an active article writer for numerous websites and blogs.