Cliff AuerswaldPresident, All Reverse Mortgage, Inc. · President at All Reverse Mortgage, Inc. (ARLO™) NMLS#14041 Company NMLS #13999

Keeping Reverse Mortgage Interest Manageable

4 Feb 2024 · 1 min

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In this segment, the speaker explains how reverse mortgages can lead to a negative amortizing loan, where unpaid interest causes the loan balance to increase over time. He notes that borrowers typically receive an initial lump sum equal to 40‑60% of the home’s appraised value, a figure that reflects the anticipated growth of the loan balance. The speaker emphasizes that borrowers retain full control over the balance: they can make full payments, partial payments, or interest‑only payments at any time to prevent the balance from rising, balancing this against potential future home appreciation.

Chapters

If you don't make a mortgage payment and you're being charged interest on money that you've borrowed, in a way it could potentially grow uncontrollably. That's what a negative amortizing loan is. Remember, you have the option to make a payment back on a reverse mortgage at any given time. Now, the con side of it, there's still an interest charge. It's just that you don't have to make it monthly. So what happens in the background is that you've got a loan balance that's rising. The amount of money that you get from a reverse mortgage initially is 40 to 60 of the appraised value. And the reason is because you have that loan balance, it's going to be rising over time. But don't forget, you also have your home's future appreciation. As you grow older, yes, your loan balance is going to grow if you choose not to make the mortgage payment. You're in complete control of your loan balance. If you don't like to see it rise, you can make a payment back. If you want to make just a smaller payment back, it's up to you entirely. You can even make just interest only if you just want to keep your balance from