Older people often have a small income. They own their homes but need extra
income per month. More and more, they are looking into reverse mortgages.
What is a reverse mortgage?
A reverse mortgage is a loan against your home that you don't have to pay
back for as long as you live in your home. Rather than you making payments, the
lender pays you a certain amount each month.
Who is qualified for a reverse mortgage?
You must be at least 62 and have no debt on the house. If you do have debt,
it must be small enough so that it can be included in the reverse mortgage
loan. In other words, the reverse mortgage must be the "first"
mortgage.
How much money can I get?
The general rule is the older you are, the more you get and the more the
house is worth, the more you get. The amount you get depends on the plan you
select. Some cost a lot more than others, reducing the amount of cash you get.
The federally insured Home Equity Conversion Mortgage or HECM is almost always
the least expensive loan.
What if I "Outlive" the amount of the loan?
This would happen if the rising loan balance is more than the value of the
home. But don't worry; you can never owe more than the value of the home at the
time the debt is repaid. This is called the "non-recourse" limit and
it means that the lender has no legal right to anything but the value of the
home when they are seeking repayment.
When is repayment due?
Repayment is due when the last surviving borrower dies, sells the home, or
permanently moves out of the house. Repayment is also due under the following
conditions: