What Is A Reverse Mortgage? - part 1

by Barry McDonald

What is a Reverse Mortgage?
A Reverse Mortgage is a popular but complex home loan just for senior homeowners. If you qualify for a Reverse Mortgage, you will not have to make monthly payments on the loan. Instead, the lender pays you. Typically, the Reverse Mortgage is repaid from your home's equity when you sell the home, move out permanently, or die. You, or those who will inherit from you, can keep any sales proceeds from your home in excess of what you owe the lender. To qualify for a Reverse Mortgage, you must be a homeowner who is at least 62 years old. The mortgage on your home must be fully or nearly paid off. Generally, the amount you can borrow depends on the value of your home, the amount of equity you have in the home, and your age at the time of loan application. If you are considering taking out a Reverse Mortgage, you can and should get free and confidential Reverse Mortgage counseling from trained housing counselors certified by the Department of Housing and Urban Development.

How Do I Know If a Reverse Mortgage Is Right For Me?
A Reverse Mortgage may be right for you if: You have a regular need for additional living funds; You live on a fixed income, and your only asset is your home equity; You do not plan to leave your home to your children or others who will inherit from you.

Don't Take a Reverse Mortgage if: You want to leave your home, free and clear, to your children or heirs; You have another, less costly means to reach your financial goal. A Reverse Mortgage can be an expensive way to borrow money.

What Are Some of the Advantages of a Reverse Mortgage?
A Reverse Mortgage can help you maintain your financial independence and an adequate standard of living. A Reverse Mortgage allows you to remain in your home and retain ownership. The money you receive from a Reverse Mortgage is tax-free.

What Are Some of the Disadvantages of a Reverse Mortgage?
Reverse Mortgage options can be confusing and numerous. Get counseling. Reverse Mortgages are more costly to set up than other types of loans. Although the proceeds are tax-free, a Reverse Mortgage may affect your eligibility for certain "need based" public benefits such as Medicaid, Supplemental Social Security Income (SSI), and Medi-Cal benefits.

What Types of Reverse Mortgages are Available?
There are three types of Reverse Mortgage plans available today: FHA-insured; lender-insured; and uninsured. Each type differs. A Reverse Mortgage counselor can help you decide which type is right for you and which lender offers the program that best meets your needs.

Read the end of
What Is A Reverse Mortgage?

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Related Reverse Mortgage Articles: Helpful Information On Reverse Mortgages Helpful information on reverse mortgages: advantages & disadvantages. The Disadvantages Of Reverse Mortgages A reverse mortgage can be an attractive option for many home-owning seniors that are having a hard time making ends meet. But you must understand the potential hazards of reverse mortgages. Home Equity Loan - With A Reverse Mortgage, Your Home Pays You! Unlike a traditional home equity loan, a reverse mortgage requires no repayment for as long as you live in your home. How Do You Know If You Need A Reverse Mortgage? With the growing popularity of reverse mortgages across the country, more and more seniors are asking themselves, "Do I need a Reverse Mortgage?" Reverse Mortgage Lender This article will discuss some of the things that will help you in choosing the right lender, the best cost, and the safest choice in whether a reverse mortgage is right for your future.

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