Reverse Mortgage
A reverse mortgage (a type of Home Equity Conversion plan) is a financing strategy that allows older homeowners to convert their home's equity into monthly cash payments (loans) while continuing to live in their homes. Loans, plus interest, are not paid back until the homeowner transfers title to the home, moves out of the home, or dies; or the repayment can be made at a future date agreed upon by the financial lender and the homeowner. When due, the loan amount is typically paid through the sale of the home. Monthly cash payments to the homeowner can be used for any purpose; for example, daily living expenses, taxes, home health care, home repair, trips, educational payments for grandchildren, or for any other use preferred by the homeowner.
Reverse mortgages should not be confused with home equity loans, which work much like a credit card—allowing a homeowner of any age to borrow money against the equity value of their home, but are repayable immediately, in total or in monthly installments.
Primarily, reverse mortgage products offered are those designed by the U. S. Department of Housing and Urban Development (HUD) and Fannie Mae. Both require that homeowners receive counseling by an impartial reverse mortgage counselor before engaging in this complex financial instrument. HUD trains reverse mortgage counselors, and a list of "HUD-approved Reverse Mortgage Counseling Agencies" can be viewed at:
HUD Approved Housing Counseling Agencies
Information about reverse mortgages is available at:
- Home Equity Conversion Mortgages
- AARP Reverse Mortgage
Information
- Money from
Home(Fannie Mae)
- HUD Reverse Mortgage
- Tyler Kraemer and Tammy Kraemer (2007), The Complete Guide to Reverse Mortgages: Turn Your Home Equity into Instant Income!
- T. E. Ballman (2004), The Reverse Mortgage Handbook: A Consumer's Guide for Senior Homeowners.
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