What is a reverse mortgage?  Information you need to know about reverse morgages before refinancing your home

A reverse morgage is a special type of loan used to convert the equity in your home into cash.  It allows anyone 62 years or older to convert part of the equity in their home into tax-free income without having to sell their home or take on any additional monthly payments.  Instead of making mortgage payments to a lender as with a traditional mortgage, the lender is making payments to you based on the equity in your home; the amount owed can never exceed the value of your home.  The lender recovers the loan amount withdrawn against the equity in your home and paid to your over the reverse mortgage period, once you no longer occupy your home as a principle residence, such as when you sell the home or permanently move out.  At that time your home is generally sold and the outstanding reverse mortgage amount is paid back to the vendor.

The main benefit of a reverse mortgage is that is allows you to access either a lump sum or monthly payments of cash, using the equity you have built up in your home without having to sell it, thereby allowing you to continue living in your own home as long as you wish.  Common reasons for getting a reverse mortgage include wanting additional cash to:  cover daily living expenses, home repairs or modifications (i.e. installing an access ramp, widening hallways, or bathroom modifications), paying off existing debts, paying property taxes, preventing foreclosure, or paying medical expenses.   The cash from a reverse mortgage can be used for anything you wish,  even just to take a much needed vacation.

Eligible Properties
Several property types are eligible for a reverse mortgage including:  single family homes, manufactured homes built after 1976, condominiums and townhouses.

Qualifying
There are few requirements to qualify for a reverse mortgage although you must be able to get a large enough reverse mortgage to completely pay off any existing loans on your home.   There are no medical or income qualification requirements, however you need to meet with a counselor before applying for a reverse mortgage.  The counselor will provide you with all the information about reverse mortgages and help you decide if this is the best financing option for you or your current situation. 

Payments
You have various options of how you obtain the funds from a reverse mortgage.  This includes lump sum payments, fixed monthly payments for a specified period of time (up to for life), as a line of credit or any combination of these.  A popular option is a line of credit which allows you the most flexibility since you can access the loan proceeds as you require at any time.
 
 
How Much Money Can You Get? 
The amount of funds you can get from a reverse mortgage depends upon how old your are, the appraised value of your home, interest rates and any lending limits defined by the vendor.  You will be able to get more money the higher the value of your home, the older that you are and the less that you owe on your home. 

See if REVERSE mortgage is for you Free Financial Evaluation!