What is a "Reverse Mortgage"
and how do they work ?
Reverse mortgages are a relatively new concept in mortgage loans that allows a property owner who owns his or her own home to get a steady income stream from that property. A reverse mortgage requires no repayment of the loan as long as the home is owner occupied and other stipulations are met.
A reverse mortgage enables older homeowners (62 and older) to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. Eligible property types include single-family homes, manufactured homes (built after June 1976), qualified condominiums, and townhouses.
Reverse mortgages are federally insured by “Home Equity Conversion Mortgage” program or by “Fannie Mae’s HomeKeeper”, and allow a property owner to get cash from his or her built-up equity in the home. Generally, you can receive the proceeds of a reverse mortage in any of several ways; as a lump sum payment, in monthly installments, or, as is commonly the case, as a line of credit which you can draw upon as needs present themeselves.
The proceeds from a reverse mortgage can be used for anything, including covering normal living expenses, repairing or modifying the property (e.g.: making it more handicapped-accessible), paying health care expenses or other existing