| Item |
Reverse Mortgage |
Traditional Mortgage |
| Purpose of loan |
To release the equity in the home and use the proceeds to live a more comfortable, stress-free, retirement |
To purchase or refinance a home |
| Before loan closing, you have |
Substantial equity in the home |
No or little equity in the home |
| At loan closing, you |
Owe very little and have substantial equity |
Owe a lot, and have little equity |
| While the loan is outstanding, |
You receive payments from the lender
Loan balance rises
Equity declines |
You make payments to the lender
Loan balance goes down
Equity grows |
| At the end, you |
Owe whatever amount was borrowed, plus accrued interest
Have much less, little, or no equity |
Owe nothing
Have Substantial Equity |
| Final analysis |
Rising Debt-Falling Equity Loan Program |
Falling Debt-Rising Equity Loan Product |
|