Educate Yourself

Traditional vs. Reverse Mortgage

What is a traditional mortgage? This is a type of loan where the lender will lend you the funds to buy a new home. In exchange, you agree to pay the lender back any money you borrowed, along with interest, over an extended period of time.

What is a reverse mortgage? This type of loan allows you to access a portion of your equity that had been built up in your home to be obtained without having a monthly mortgage payment. The existing mortgage balance will be paid off during the process of a reverse mortgage loan. You must be at least 55 years or older to apply for this loan.

So, what home loan is right for you?

A traditional refinance makes more sense for those who:

• Don’t plan on living in this home long term.
• Have sufficient retirement funds and won’t be supplementing your retirement income.
• Are not 55 years of age or older.
• Are not struggling to make your monthly mortgage payments.

A reverse mortgage loan makes more sense for those who:

• Plan to stay in your home long term.
• Are looking to supplement your retirement income and could benefit from no monthly mortgage payments.
• Are 55 years of age or older.
• Want to plan ahead for a rainy day and obtain a line of credit for unexpected expenses.