Some Important Facts about Reverse Mortgages

• The U.S. Department of Housing and Urban Development, or HUD, established reverse mortgages to help seniors who are homeowners pay for their living expenses and rising medical costs.
• To qualify for a HUD reverse mortgage you must be at least 62 and either own your home outright or have only a small balance left on your current mortgage.
• A reverse mortgage allows qualified homeowners to borrow money against their home's equity.
• Qualified homeowners can take out a reverse mortgage to get a lump sum of money, receive a monthly income or access money, similar to a line of credit.

Friendly Reverse Mortgage Advice

As long as a borrower lives in his or her home, HUD does not require repayment of the money borrowed through a reverse mortgage. If the homeowner sells the home or is deceased, the lender will recover the loan and the interest at the time the home is sold. Any additional value acquired from the sale of the home would be passed onto the surviving legal recipients. If you take out a reverse mortgage, HUD requires you to have mortgage insurance. If proceeds from the sale of the home are less than what the homeowner owes for the reverse mortgage loan, then HUD will pay the remaining balance of the loan, which is covered by the mortgage insurance.

There is no minimum income or amount of assets required to qualify for a reverse mortgage. As long as you own a home and are of qualifying age, you can receive a HUD reverse mortgage. If you owe money on your home mortgage, you must pay off this debt with money from the reverse mortgage. A reverse mortgage must be the first and primary lien on the property. Like a traditional mortgage, there are closing costs and financing fees associated with a reverse mortgage. You may finance these costs into the mortgage loan.

The Department of Housing and Urban Development (HUD) is another good source of information. HUD can provide you with the information necessary to determine if a reverse mortgage is right for you.