Whether seeking money to finance a home improvement, pay off a current mortgage, supplement retirement income, or pay for healthcare expenses, many older Americans are turning to “reverse” mortgages. They allow older homeowners to convert part of the equity in their homes into cash without having to sell their homes or take on additional monthly bills.
What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower no longer use the home as their principal residence.
Who Can Qualify?
To be eligible the FHA requires that you be a homeowner 62 years of age or older.
You must own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home.
Many homeowners want to know if the lender can take their home away if they outlive the loan? The answer is no. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current and you can never owe more than the value of your home at the time you or your heirs sell the home. It's a option worth looking into.