• A reverse mortgage can provide cash during your retirement years.elderly/women/ visitors entering together image by L. Shat from Fotolia.com
  
  Reverse mortgages are one option available to homeowners over age 62 who need cash and who want to remain in their own homes. These mortgages allow homeowners to draw on their home equity. Homeowners considering a reverse mortgage should carefully review their options to decide if this type of loan is the best solution.
  
  

What is a Reverse Mortgage?

• A reverse mortgage is a type of home loan. However, unlike traditional home loans, you don't have to pay back the money you receive as long as you live in your home. Therefore, a reverse mortgage allows homeowners to get money from their homes without having to move or make monthly mortgage payments. You can receive the money from your reverse mortgage in the form of monthly payments, a lump sum or a credit line that you can access as needed.
  
  

Who Qualifies for a Reverse Mortgage?

• To qualify for a reverse mortgage, you typically must be age 62 or older, own your home and live in that home as a primary residence. If you don't own your home, you may be able to use the proceeds from a reverse mortgage to pay off any other mortgages or home debt. There are no income qualifications for receiving a reverse mortgage. In fact, because you don't have to make monthly payments, you can have no income and still qualify for a reverse mortgage.
  
  

When Does a Reverse Mortgage Come Due?

• If you sell your home or move out of it permanently, you must begin paying back the money you received for your reverse mortgage, as well as any interest that accumulated. In addition, you may be required to begin repaying your loan if you neglect to maintain and repair your home, pay your property taxes or buy homeowners insurance. If you live in your home until your death, your heirs will be responsible for paying back your reverse mortgage loan.
  
  

How Much Money Can I Get?

• The amount of money you can get through a reverse mortgage depends on your age, the value of your home and the current interest rates. You generally cannot receive more money than your home is worth. The older you are and the more valuable your home, the more money you will be able to receive.
  
  

Are there Drawbacks to Reverse Mortgages?

• According to the AARP, reverse mortgages are expensive loans that you should use only in a financial emergency when no other options are available. Before you even get the loan, you may need to pay appraisal fees, origination fees and other fees that add up to hundreds of dollars. Then, monthly service fees can reduce the amount of money you receive, even as your home equity drops and your debt increases.
  
  

Are there Alternatives to Reverse Mortgages?

• Home equity loans, personal loans or traditional mortgages are all less-costly alternatives for homeowners who can make monthly payments. Another alternative is to sell the home outright and move to a more affordable home.