Reverse Mortgage - Basis

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A reverse mortgage is designed to be used by people 62 years or older to help with their cash flow. A reverse mortgage allows you to withdraw some of the equity from your home to supplement social security, meet unexpected medical expenses and make emergency home improvements.

Your Home May Be Your Biggest Single Investment

The home is the biggest single investment for most people. When you bought your home you probably did it with type of loan known as a home mortgage. With a home mortgage, your house is used as collateral. If you fail to keep up with the mortgage payments you will lose your home. This is because the lender will sell your house to get their money back.

Building Equity

The easiest way to think about equity is that it is the amount of money you would receive after you sell your house and pay off your loan. It is the difference between the value of you house and the amount you owe. Equity belongs to you. Your equity increases over time. As the home mortgage is paid down, you "own" more of the house. Also, your house appreciates in value over time, so this also adds equity. A reverse mortgage is one way to take advantage of the equity in your home.

Using Your Equity

If you have lived in you home long period of time, you may have paid off your home mortgage. If not, you may owe only a small amount on your mortgage. In addition you have benefited from appreciation from all of those years. There is a lot of value in your house that you can tap. If you are a senior, a reverse mortgage is a way to help cover expenses associated with aging.

What is a Reverse Mortgage

A reverse mortgage is a special type of home loan. Unlike a home equity loan or second mortgage, you do not have to pay the money back until you no longer use the home as a primary residence. You also do not have to qualify for the loan in a traditional sense. The purpose of the reverse mortgage is to give you cash flow.

Qualifying for a Reverse Mortgage

To be qualify for a FHA HECM reverse mortgage: you must live in the home; the home must have no other, or a small, mortgage; and you must be least 62 years of age or older. You are also required to get consumer information from an approved HECM counselor.

More Information on Reverse Mortgages

Read articles and follow article links to keep on researching reverse mortgages. This is one way to find private lenders and counselors specializing in reverse mortgages. But do your homework and do not forget to talk to an HECM counselor (800-569-4287) after you have done your web research, and prior to making any purchasing decisions.