Reverse mortgages are becoming popular in America. Reverse mortgages were designed only a few years ago and were made to help people who have retired and stopped working, but still have to make monthly mortgage payments. They are a special type of home loan that lets a homeowner convert the equity in his/her home into cash. Reverse mortgages can be relatively complex, and their use should be considered carefully by the borrower. Reverse mortgages have been around for a long time, but it wasn’t until the early 1990s that they began earning respectability after the Federal Housing Administration began insuring reverse mortgages for repayment to lenders.
Below is a list of the most commonly-used “mortgage phrases” and their meanings to help you understand them better:
Closing – Final arrangements to transfer title of property as well as allocate charges and credits.
Closing Costs – Closing costs are fees paid by the borrower when a property is purchased or refinanced. Costs incurred include a loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, deed recording fee, and credit report charges
Equity – The difference between the current market value of a property and the principal balance of all outstanding loans.
Lender – The bank, mortgage company, or mortgage broker offering the loan.
Mortgage – A legal document that pledges property to a creditor for the repayment of the loan, and is the term used to describe the loan itself.
Principal – The amount of debt, not counting interest, left on a loan.
