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:

• You don't pay property taxes
• You don't maintain and repair the home
• You fail to keep the home insured
• You rent out the home
• You add a new owner to the title
• You take out new debt against the home

Do my heirs have to pay off my reverse mortgage loan?

Yes. They may either sell the home to pay off the debt or, if they wish to keep the home, they may pay off the debt. The debt owed equals all loan advances plus interest. If that amount is less than the home is worth, the heirs keep the difference.