A reverse mortgage allows individual homeowners over age 62 to convert some of the equity of their home into cash payments from their lender. This allows many retired adults tax-free income that will not affect their Medicare or SSI benefits, but may affect other benefits including Medicaid. The individual still maintains ownership of their home. There are no restrictions on the use of this money. There are additional costs involved which will vary according to lenders fees, mortgage insurance premiums, appraisal fees, and closing costs. This is a loan that needs to be repaid when the home is no longer your primary residence, or when the homeowner passes away. Heirs to the estate then have the option to pay off the loan, or sell the home and pay off the loan with the proceeds. Excess proceeds over the balance of the loan go to the owner or their heirs.
American Association for Retired Persons (AARP)
AARP has information to help you learn about reverse mortgages, understand the process and help you decide if this is right for your situation. Follow the link below for more information.
Housing and Urban Development (HUD)
Housing and Urban Development (HUD) is the federal department that oversees housing issues, and they have additional information on housing including a page on reverse mortgages.
National Reverse Mortgage Lenders Association
The National Reverse Mortgage Lenders Association has posted some information to help people understand reverse mortgages as well as help them find a counselor to discuss the many different options involved in this one time conversion.
Federal Trade Commission
Like any loan this is an opportunity that can help you but also benefits the lender. The Federal Trade Commission has posted information on what you should be aware of when considering this type of loan. There are also links to organizations where you can obtain advice.