A Reverse Mortgage is a loan against the equity in the home that provides tax free cash advances, but requires no payments during the term of the loan. Because there are no monthly payments during the life of the loan, the mortgage balance grows larger and the equity gets smaller.

Reverse Mortgages

Reverse mortgages (also called home equity conversion loans) enable senior homeowners age 62 and older to tap into their equity without selling their home. The lender pays you money based on the equity you've accrued in your home; you receive a lump sum, a monthly payment or a line of credit. Repayment is not necessary until the borrower sells the property, moves into a retirement community or passes away. When you sell your home or no longer use it as your primary residence, you or your estate must repay the cash you received from the reverse mortgage plus interest and other finance charges to the lender.

Most reverse mortgages require you be at least 62 years of age, have a low or zero balance owed against your home and maintain the property as your principal residence.

Reverse mortgages are ideal for homeowners who are retired or no longer working and need to supplement their income. Interest rates are adjustable and the money is nontaxable and does not interfere with Social Security or Medicare benefits. Your lender cannot take property away if you outlive your loan nor can you be forced to sell your home to pay off your loan even if the loan balance grows to exceed property value.

Who Can Qualify:

You must be at least 62 years old and own your own home or condominium in order to qualify for a Reverse Mortgage. There are no income or credit requirements to qualify.

You may be eligible for a Reverse Mortgage even if you still owe money on your first mortgage.

3 Types of Reverse Mortgages

There are three types of Reverse Mortgage Products available:

• FHA HECM (Home Equity Conversion Mortgage)
• Fannie Mae Homekeeper
• Financial Freedom Cash Account

Another benefit of a Reverse Mortgage is that they are "non recourse", which means that no matter how high the loan balance grows, the borrower or their heirs never owe more than the home's fair market value.

Proceeds of the Reverse Mortgage

The proceeds of a Reverse Mortgage can be used for anything:

• Daily living expenses
• Home repairs and home improvements
• Medical bills and prescription drug; long-term health care
• Pay-off existing debts
• Education or travel
• Retirement or estate planning
• Other needs you may have

The proceeds of a Reverse Mortgage are available as a lump sum, fixed monthly payment as long as you live on the property, a line of credit; or a combination of these options.