Reverse Mortgage Facts
Recently on the market of banking services, especially in the USA, such banking instrument as reverse mortgage has become extremely predominant. Concluding a reverse mortgage contract, real estate serves as a pledge. Bank experts appraise a potential borrower's property and calculate a maximum amount of credit that bank is ready to lend. A credit shall be repaid by means of a further selling of property. In case of bank's failure to get back a total amount of credit after the selling of a property, the margin shall be paid by the state.

Reverse mortgage shall be paid as either flat or monthly payment. First of all, reverse mortgage helps apartment owners who do not posses any other types of property, and get inadequate salaries or pensions. The plan, according to which a borrower gets monthly payments reserving the right to live in a dwelling, may be compared with a liferent on the basis of a rent contract widely-spread in Germany. Reverse mortgage is getting especially urgent, when pensions and wages are very poor, or when a borrower has no children.

It is typical that the conditions of credit repayment vary. Sometimes a bank lender may sell mortgage property, but it is a very rare situation which is unusual for the market. In most cases, in case of default lender is insured against a confiscation of an apartment until both at least one of a borrower's relatives who is permanently registered is alive, and borrower pays taxes and other property outgoings including insurance.

In the United States reverse mortgage took hold 20 years ago and became an important part of the Retirement System. In the USA this type of mortgage is called “Eat your brick”, because having such a property mortgage, its owner literally “eats away” his or her dwelling.