Legal Question in Real Estate Law in Pennsylvania

Re: Reverse mortgages

Reverse mortgages, like regular mortgages, like home equity loans, are a way to borrow money for your needs and secure the loan with the equity in your home. It is not a scam, but a financial tool that might be suitable for you in the right circumstance. Generally they are most useful for someone who is "house rich" but with little or no income. The elderly many times have paid down or paid off their home mortgages. They have a lifetime's investment tied up in their home; but may be living on a fixed income. A reverse mortgage is one way to tap into this equity to give them a monthly check to help pay expenses. With a reverse mortgage, the lender sends you some amount of cash that you have bargained for in advance, and you make no repayments. The lender charges you interest on the cumulative amount of cash that they have sent you. The amount you owe gets larger as more and more cash and more interest is added to your loan balance. As your debt grows, your equity shrinks (unless your home's value is growing at a high rate). When the borrower dies or wishes to sell their house, the house is then sold, the total amount of the loan is paid to the lender, and the balance left is paid to the borrower or his or her estate. Like any purchase, you should shop around and pick the best program for you - and compare the interest rate, the "points" and other fees and expenses that are being charged. For more information, go to the AARP web site at http://www.aarp.org/money/revmort/.