How Reverse Mortgages Work
What Is A Reverse Mortgage?
A reverse mortgage is a home loan that you do not have to pay back for as long as you live in your home.
It can be paid to you in one lump sum, as a regular monthly income, or at the times and in the amounts you want.
The loan and interest are repaid only when you sell your home, permanently move away, or die.
How Do Reverse Mortgages Work?
- Most require no repayment for as long as you live in your home.
- They are repaid in full when the last living borrower dies, sells the home, or permanently moves away.
- Because you make no monthly payments, the amount you owe grows larger over time. By law, you can never owe more than your home’s value at the time the loan is repaid.
- You continue to own the home, so you must pay the property taxes, insurance, and repairs. If you fail to pay these, the lender can use the loan to make payments or require you to pay the loan in full.
Reverse Mortgage Eligibility
Eligible Homeowners - All homeowners must be at least 62 years old.
- At least one owner must live in the house most of the year.
Eligible Homes - Single family, one-unit dwelling.
- Two-to-four unit, owner-occupied dwelling.
- Some condominiums, planned unit developments or manufactured homes.
How Much Will I Get with a Reverse Mortgage?
Reverse mortgages can be paid to you: - All at once in cash
- As a monthly income
- As a credit line that lets you decide how much you want and when
- In any combination of the above
The amount you get usually depends on your age, your home’s value and location, and the cost of the loan. The greatest amounts typically go to the oldest owners living in the most expensive homes getting loans with the lowest costs.