Reverse Mortgages: Potential Income for Older Americans
Reverse mortgages have become very popular in recent years as a source of income for
older Americans. The lender pays you the money either in a lump sum, in monthly installments,
or as a line-of-credit. A reverse mortgage is a loan secured by home equity that doesn’t need to
be repaid until the end of the loan term, which is usually when the homeowner no longer
occupies the home as a principal residence, sells the home, or dies.
According to federal regulations, if you apply for a reverse mortgage loan you must
receive counseling from a state-certified housing counselor who will help you understand
the implications of your choice. There is no charge for this service.
Call us at 888-662-8551 or use the form below for a list of Certified Reverse Mortgage
Counselors.
If you obtain a reverse mortgage, you remain responsible for maintenance, insurance and
taxes for the home during the loan period. You can use the money from the reverse mortgage
however you choose. You cannot be forced to sell or vacate the home if the money received
from the loan exceeds the value of the home. In addition, should you die and your spouse
is a co-borrower, he or she cannot be forced to sell the house as long as he or she occupies
the home as a principal residence.
When the borrower (and any co-borrower) dies, the loan balance plus accrued interest
becomes due and payable. Your heirs may repay the loan and keep the home, or sell the
home, repay the loan and keep the balance. If the loan exceeds the property value, your
heirs will owe no more than the property value, and no additional financial claims can be
made against them or the estate.
To qualify for a reverse mortgage, you and any co-borrower must be at least 62 years
old, must own your home free and clear (or have a very low outstanding debt), and must
occupy the home as your principal residence.
Click here to view the online Reverse Mortgage presentation
(PowerPoint, 607k).
Got a followup question? Ask here and have a lending specialist answer it!
Fixed Rate Mortgage vs. LIBOR ARM
- This calculator compares a fixed rate mortgage to a LIBOR ARM.
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