A reverse mortgage is one of the possibilities of elders to obtain a loan. In case a homeowner is old and his income is not enough to cover all expenses with medical care, food, electricity, water and others, he can take a mortgage loan for which he'd grant with the home.

You may ask now how this old person who doesn't work anymore and who doesn't have an income to allow daily living, how he'd be able to pay mortgage installments on top of all other things. Actually, in the reverse mortgage, the borrower doesn't pay anything. The monthly payments are deducted from his home equity. When the person dies or goes to a care center, the house is sold and the lender takes the rest of the mortgage money.

In the United States, for a homeowner to qualify for a reverse morgage, it's necessary that he or she pays off other previous mortgages he may have. Age is also a pre-requisite, some states requiring the minimum age of 62 for taking into consideration a reverse mortgage request.

The amount of money a homeowner can take is calculated taking into consideration the value of the property, the current interest rate and the age of the person. The older you are, the more money you'll qualify to get. The sum can be paid either all at once, as a lump sum, or in monthly installments, or via a credit line. Usually, the advance payment comes with the highest commissions, but you can have all the money at once, in order to buy something expensive or to pay for some surgery, in case that's why you needed the reverse mortgage in the first place.

The loan advance resulting from a reverse mortgage is not taxable, but you have to take care, if you wish to keep the money into a bank account, that it might be considered as liquid assets and you may lose eligibility for some social healthcare programs.

How to find a reverse mortgage lender

HUD advises that you shouldn't make use of a company that charges a fee for helping you find reverse mortgage lenders. This information is available free of charge. This is an excerpt from the official HUD website:

"FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. FHA provides this information free, and HUD-approved housing counseling agencies are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders. Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you."

This is a brief overview on the reverse mortgage. If you're interested, you'll surely find more information online or at your local authorities. Anyway, it's a way for seniors to live in their own home until they can't take care of themselves anymore.