What Is A Reverse Mortgage?

5/13/2007

posted by N. Sioris

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A Reverse Mortgage is a unique type of home equity loan. You receive cash against the value of your home without selling it. You can choose whether you want to receive a lump-sum payment, a monthly payment, or a line of credit. There are no restrictions on how you use the reverse mortgage funds.

Reverse Mortgages are available to homeowners age 62 and older. Unlike a traditional mortgage, with a reverse mortgage, you won't be required to provide any income or credit history to get the loan, and you do not make any monthly payments. Instead, the amount you owe accumulates over time, based on loan payouts and interest on the loan. You do not have to repay the loan as long as you continue to live in the home. The loan becomes due when you or the last borrower sells the home, passes away, or permanently moves out of the home.

You continue to live in the home and you retain title and ownership of it. The bank does NOT own your home, which is One of The Biggest Myths Circulating About Reverse Mortgages You are still responsible for taxes, hazard insurance, and home repairs. You do not have to repay the loan as long as you continue to live in the home. The loan is repaid when you pass away, sell, or permanently move out of the home. The funds from a reverse mortgage are non-taxable. They do not count toward income or affect Social Security or Medicare benefits. They do not count as income for Medicaid benefits eligibility as long as the reverse mortgage money you receive is spent within the month that you receive it.