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.