What is a reverse mortgage?

A reverse mortgage is a loan that allows senior homeowners over the age of 62 to convert a portion of the equity in their homes to tax-free income. The money received from a reverse mortgage can be used for any purpose, and borrowers can elect to receive monthly payments, a lump sum or a line of credit. In some cases, they may elect a combination of all three options. The amount of money available to the senior homeowner is based on three things - the age of the youngest borrower, prevailing interest rates and the value of the home.

To qualify for a reverse mortgage, the senior homeowner must use the home as his or her primary residence and continue to pay the real estate taxes and homeowner’s insurance. There are no income or credit requirements to be met. Borrowers will never have to make a monthly payment, and the loan does not have to be paid back until the last borrower passes away or moves out of the house.

For additional information about reverse mortgages click on the following links:

American Association of Retired Persons (AARP)
www.aarp.org/revmort/

Federal National Mortgage Association (Fannie Mae)
www.fanniemae.com

National Reverse Mortgage Lenders Association (NRMLA)
www.reversemortgage.org

National Center for Home Equity Conversion (NCHEC)
www.reverse.org

U.S. Department of Housing and Urban Development (HUD)
www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm

National Council on Aging (NCOA)
www.ncoa.org