Reverse Mortgage Information Center

As thousands of Americans plan for retirement and turn to alternative sources of post work income, one that might come to mind is a reverse mortgage. The concept of a reverse mortgage is pretty simple: someone pays you, based on the value of your home. There are plenty of options available as to how you want to receive this money. You may choose to take monthly payments, take a lump sum, or receive a line of credit.

When you bought your home you probably had to make mortgage payments. As you did, you gradually decreased the total cost of debt owed and gradually increased the amount of equity in your home. Reverse mortgages are the opposite. As time goes by, you begin to receive more and more money from the lending company.

The objective of a reverse mortgage is to have an added source of income, especially if you’re prepared on selling your home closer to the end of your life or after you die. It allows you to receive the equity from your home and enjoy it in retirement. The amount you receive in the reverse mortgage is based on the value of your home, current interest rates, and your current age.

Once you’ve received the amount your home has been determined to be worth, less any fees charged by the lender, you will owe that amount to the lender. You can pay that back any way you wish, but in numerous cases, the idea is to sell your home and repay the debt. Usually, this is done by an estate after a person passes away and still has debt. As long as you’re permanently living in your home, you don’t need to pay the lender back.

Reverse mortgages hold a lot of details and can get confusing, which is why it’s best to ask a financial professional for advice before looking into them any further. While they might have a lot of technical details, they do not have many requirements. In general, you must be 62 years of age or older, and own your own home. Those are the two basic requirements of a reverse mortgage. Beyond that, there are a few other basic things to keep in mind.

Reverse mortgages do have costs upfront, just like a regular mortgage. They also have monthly service fees. However, all of the money you get from the lender is tax-free. To get a better estimate of how much a reverse mortgage would pay you, it’s a good idea to meet with a financial professional.

Unfortunately, reverse mortgages aren’t for everyone. Reverse mortgages could supply a valuable resource to individuals when the circumstances are right, but there are many considerations to be taken before choosing one, involving: fees, restrictions, estate planning considerations, need for income, other assets, health considerations, insurance coverage, and so on.

Many times a reverse mortgage is a last resort for income for many individuals and most individuals conclude that reverse mortgages are not for them. And in some situations, for instance, if you want the house to stay in your family for many generations, then it may not be for you.

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