Definition - What does Reverse Mortgage mean?
A reverse mortgage is a mortgage loan that a borrower can take out if he or she puts up his or her home as collateral. In other words, the borrower basically gives the house to the lender in exchange for an amount of money. However, the borrower can still continue to live in the house and own the title. However, when the borrower moves or dies, the lender will take the house and sell it to recoup the funds.
In the context of the law, reverse mortgages are legally binding agreements and any breach of the contract can result in a lawsuit.
Justipedia explains Reverse Mortgage
The purpose of a reverse mortgages is to give homeowners a way to get cash from their homes without having to sell their home and move. This allows homeowners to keep stability in their lives while they generate funds for whatever they need.
Legal trouble can arise if a homeowner attempts to get out of the deal if he has taken out a reverse mortgage. For example, if he tries to sell the house after he has already offered to to the bank as collateral.
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