A reverse mortgage is one possible way you can avoid bankruptcy in Pennsylvania. This option is only available to Pennsylvanians 62 years or older. A reverse mortgage can release equity in your home in a single lump payment, or over a series of multiple payments.
A reverse mortgage is an interesting twist on a home loan, allowing you to receive cash in exchange for the equity in your home. Basically, the equity which you have been building in your home for years of home mortgage payments can be paid to you.
With a traditional mortgage you pay the lender a monthly amortized payment; equity in the property increases with each payment, and in the end the property is released from the lender.
A reverse mortgage works in just the opposite way – each month, you receive a payment, and each month your debt in the property increases (you can also ask for a single lump sum payment.). No repayment is required until you no longer use this house as your primary residence.
Of course, there are a few rules for reverse mortgages. First, you must use the proceeds of the reverse mortgage to pay off any existing mortgage that exists on the house. Also, before filing, you must receive financial counseling from a third party source, which was previously approved by the Department of Housing and Urban Development.
