Eighty percent of seniors own the home that they live in. It is the largest single asset class owned by seniors and for many individuals represents most of their net worth. A reverse mortgage is a special type of mortgage for individuals aged 62 or older that enables conversion of home equity into cash. It is a loan secured by the owner’s home; however a reverse mortgage functions as if the homeowner had sold the home early, continued to live there and was paid for the home while occupying it. It is called a reverse mortgage because for years the homeowner put money into the home and is now taking money back out while retaining the title and continuing to live in the home.
The main benefit of a reverse mortgage is it allows a homeowner to tap the built-up equity in the home by receiving immediate cash, lifetime payments or a line of credit. If monthly payments are chosen, the homeowner will receive a monthly income that will continue even if he outlives the actuarial life expectancy tables. The borrower does not have to meet underwriting criteria as for a forward mortgage because there are no income or credit qualifications to be met; the home is underwritten, not the borrower. A person holding a durable power of attorney, a life trust or one appointed as a conservator is eligible to obtain the loan on behalf of the homeowner. Since the borrower is not required to make any payments, there is never a risk of losing the home through foreclosure.
A reverse mortgage can make it possible for senior homeowners to finish out their lives in the comfort, security and privacy of their own homes. An income is assured for as long as the home is owned.
To find a lender who specializes in Reverse Mortgages go to ReverseMortgage.org.