Reverse Mortgage FAQ

In this section we will go over some of the reverse mortgage FAQ’s, you can click on any of the questions to go to more detailed answers.

What Is A Reverse Mortgage?

It’s all in the name, a reverse mortgage is simply a mortgage in reverse. In a traditional mortgage the borrower makes regular payments on the loan, this builds up their equity in the home. Once the loan is paid in full, the borrower owns that home outright. In a reverse mortgage the borrower receives regular payments, in exchange they give up some of this equity to the bank. Reverse mortgages are only available to seniors over the age of 62.

How Does A Reverse Mortgage Work?

A reverse mortgage works by using the equity in the home to provide a security for lenders to borrow against without requiring monthly payments to be paid (instead monthly payments are sent to the borrower). By only lending up to a certain percentage limit (usually ~40%) lenders are able to ensure that they will be able to recoup the principal and interest that was loaned at the end of the mortgage.

How Can You Cancel Your Reverse Mortgage?

Cancelling a reverse mortgage can be extremely tricky. In most cases there is a cooling off period of 15 days, if a borrower cancels within that time period they are not responsible for any fees associated with the reverse mortgage (including exit fees). If it’s outside this time period then it’s on a case by case basis and will depend on the contract signed by the borrower.

Reverse Mortgage Definition

A reverse mortgage can be defined in a number of ways. The official definition is taken from  § 226.33 of the ‘Truth In Lending Act’, also known as Regulation Z.

What Is The NRMLA? 

The NRMLA is US based trade organization that deals with financial institutions involved in reverse mortgages. NRMLA stands for National Reverse Mortgage Lenders Association.