To understand how reverse mortgages work, it’s important to understand traditional mortgages. Traditional mortgages create a legal right to possess real estate if the promise to pay for the real estate is not fulfilled. The written permission to acquire a home if the lender is not repaid is a traditional mortgage.
A reverse mortgage is an agreement in which the lender agrees to pay a borrower a certain lump sum of money or a certain amount of money every month. In the meantime, the borrower can continue to live in his or her home.
For several years, reverse mortgages were marketed as the “best tool ever” for retirees to be able to tap into their homes’ equity while continuing to reside at home.
To understand reverse mortgages, it is important to first understand traditional mortgages. Traditional mortgages are written documents that create a legal right to possess real estate if a promise to pay (promissory note) is not honored.
Read more about reverse mortgages in Lee’s article in the Lima News here: Legal-Ease: What exactly is a reverse mortgage?
Source: LimaOhio.com, “Legal-Ease: What exactly is a reverse mortgage?,” by Lee R. Schroeder, June 15, 2019
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.