The main difference is how borrowers pay the loan back. With traditional loans or home equity lines of credit (HELOCs), borrowers make monthly payments. These payments cover the amount borrowed and interest charges.
HomeSafe Second does not require monthly mortgage payments. 1 Instead, borrowers receive access to funds in one lump sum payment at the beginning. Interest is added to the loan amount over time. Borrowers pay back the full amount when the loan comes due.
A reverse mortgage doesn’t have a set end date like a traditional mortgage. Instead, it becomes due when one of these things happens:
HomeSafe Second is different because it’s a second lien reverse mortgage. It’s not insured by the government. Also, HomeSafe Second is only available in some states:
Homes like manufactured homes and unapproved condos can’t be used with HomeSafe Second.
1 The borrower must meet all loan obligations, including meeting all loan obligations under the first lien mortgage, living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For tax advice, please consult a tax professional. For more information about whether a reverse mortgage fits into your retirement strategy, you should consult your financial advisor.
