Are you retired and in need of additional income?  If you have lived in your home for awhile and have been able to build substantial equity in your home a Reverse Mortgage could be the solution you are looking for. 

The U.S. Department of Housing and Urban Development's website article on Reverse Mortgages, "Top Ten Things To Know if You Are Interested in Reverse Mortgages" provides the clearest explanation on the subject that I have seen on the internet and is summarized as follows:

Reverse Mortgages and how you can qualify.

A Reverse Mortgage is a home loan that allows you to cash out on some of the equity from your home.  As long as you live in the home you do not need to make any payments on the reverse mortgage.  A reverse mortgage actually pays you for living in your home.

To qualify for a reverse mortgage you need to be a homowner who is 62 years or older and you need to have your mortgage paid off or you will need to pay it off at the closing on your reverse mortgage.  You also need to attend a reverse mortgage counseling session with a HUD approved counselor.

How much money can you get and when you can get it:

Your age, interest rate, and the appraised value of your home determine the loan amount of your reverse mortgage.  The current FHA mortgage limit for a reverse mortgage varies from  $200,160-$362,790. Your HUD counselor will be able to provide you with more specific information on your loan amount.  You can also use AARP's Reverse Mortgage calculator to give you a reference point of the amount you will qualify for.

When you close on your Reverse Mortgage you will receive the leftover once your closing costs and original mortgage are paid.  You can get this money in monthly payments, one big payment, or as a line of credit that you can draw from.  These options are formally known as:

• Line of credit- You choose the amount of money you would like to withdraw and when you would like to withdraw it.
• Term- You receive scheduled monthly payments in equal installments for a specific period of time.
• Tenure- You receive an equal amount of monthly payments as long as your house is your principal residence.

Who can I call for a reverse mortgage?

You can call your mortgage company to see if they handle Reverse Mortgages.

You do not need to go to any agencies that charge a fee to get a reverse mortgage.  There are several resources that are available to seniors seeking information on Reverse Mortgages. 

Reverse Mortgages are big business, get the advice of a professional

In reaction to seniors housing needs, reverse mortgages are gaining exposure in the media and with lending institutions.  Be wary of institutions that offer professional advice that specialize in mortgages for a fee. 

There are reliable sources you can turn to for information on Reverse Mortgage that don't cost a dime.  The American Association of Retired Professionals (AARP) website has an online seminar for Reverse Mortgages. The Department of Housing and Urban Development has approved counseling agencies.  You can get a list of these agencies by calling their toll free line at #1-800-569-4287.

You can also ask a qualified real estate professional for a referral of a lender who specializes in Reverse Mortgages.

Posted by Rebecca D. Levinson

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