Reverse Mortgage

The Facts About Reverse Mortgage

Many people have never even heard of a reverse mortgage and those who could greatly benefit from a reverse mortgage may not even know they qualify for the program. Reverse mortgage is a government-funded program aimed primarily at helping seniors maintain their independence. Here's how a reverse mortgage works.

To qualify for a reverse mortgage, you must own your home and be at least 62 years old. There are no credit checks for a reverse mortgage and it doesn't matter whether you have a credit rating at all. The point of a reverse mortgage that is most beneficial for the reverse mortgage borrower is that the borrower doesn't have to make any payments over the life of the loan. That's right - no payments. How can that be possible? The loan is repaid by the estate at the time of the death of the borrowers.

If you qualify for a reverse mortgage, you simply make your application through a HUD lender. If the mortgage is approved, you are given the money within a couple of months. You, the borrower, have no requirement to begin repaying the loan during your life. You also have the right to continue living in your house for as long as you live.

The amount of a reverse mortgage is limited to about half the value of your house. If you already have a mortgage on your home, you may still qualify for a reverse mortgage as long as your balance owed is less than the limit allowed for a reverse mortgage. In that case, the existing mortgage will be paid off and you'll get the proceeds in cash.

The major reason for a reverse mortgage is to allow seniors who have little cash but have significant equity built up in their homes the ability to remain self-sufficient, even when there are decreases in earning potential coupled with the rising cost of health care. You can use the proceeds to maintain your lifestyle, pay for necessities or even enjoy your retirement years. If there are two borrowers, the loan is not called due until both die or permanently move out of the house. That means that a couple won't have to worry about the remaining spouse dealing with mortgage payments or financing their remaining years.