A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live there. To be eligible for this loan you must be at least 62 years of age and have equity in your home. There are no requirements for income, assets, or credit rating. The amount of money available to you is based on a formula that factors the age of the youngest borrower, the appraised value of the property, the location of the property, and the current interest rates.
With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay the loan each month. In fact, you typically don't have to pay anything back until you die, sell your home, or permanently move out of your home. If any of these situations occcur, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs. None of your other assets will be affected by the reverse mortgage loan and the debt will never be passed along to the estate or heirs.
To learn more about reverse mortgages contact a bank or visit aarp.org or hud.gov.
Source: Aging Resource Review, Issue 6, Summer 2006, www.hud.gov and www.aarp.org