Reverse Mortgages | What is a Reverse Mortgage?

A reverse mortgage is a special kind of mortgage loan used by senior citizens to convert some or all of their home equity into cash. It is called a "reverse" mortgage because, unlike conventional loans where the borrower pays the lender, with a reverse mortgage the lender pays the borrower.

 

Reverse Mortgage Frequently Asked Questions:

Do I Qualify for a Reverse Mortgage?
What Can I Use a Reverse Mortgage For?
What Types of Reverse Mortgages Are There?

How Much Can I Get From a Reverse Mortgage?

How Much Will a Reverse Mortgage Cost?
When Do I Repay a Reverse Mortgage?

Drawbacks of Reverse Mortgages
Though reverse mortgages help thousands of elderly Americans increase monthly cash flow, this type of loan is not for everyone. Here are a few disadvantages of reverse mortgages.

  • The Home Must Be in Good Condition: If your home has major damages (e.g. roof or foundation problems), you may not qualify for a reverse mortgage until a licensed contractor repairs the damage(s).
  • High Up-Front Costs: If you plan to move from your home in the coming years, or need to only borrow a small amount, consider another loan option with fewer up-front costs.
  • Keeping It In the Family: Since a reverse mortgage depletes the equity you have in your home, you may not want to go this route if you hope to pass your home to your children after you pass away. Once the original homeowner passes away, a surviving child may pay off the reverse mortgage if he or she wants to keep the home in the family; otherwise, the lender sells the home in order to earn back the reverse mortgage amount.
  • Prevalent Reverse Mortgage Fraud: As reverse mortgages increase in popularity, so do reverse mortgage fraud. Before you sign any papers, reveal personal information, or pay for reverse mortgage counseling, contact the Better Business Bureau to confirm that the lender is reputable and trustworthy.

Consult a qualified, trustworthy reverse mortgage lender to help you decide if a reverse mortgage is right for you.