Basics

• A reverse mortgage, also referred to as a reverse equity mortgage, allows homeowners to receive money from a lender. Although the lender pays the homeowner, a reverse mortgage is actually a loan that homeowners take against their property's value. The loan must be repaid or the property will be forfeited. Just like when getting a traditional mortgage, borrowers should evaluate different reverse mortgage offers because costs vary widely. For instance, mortgages can have either fixed or adjustable interest rates. Furthermore, borrowers can receive money tax free in a lump sum, payment stream or a retirement fund. Although borrowers keep the titles to their property, the lenders usually own the property after the homeowner dies, so the house cannot be inherited by any heirs unless the heirs want to pay off the reverse mortgage balance.
  
  

Counselors and Calculators

• For free assistance, contact the U.S. Department of Housing and Urban Development at (888) 466-3487 and a counselor close to you will be located. Counselors also may be reached through Money Management International at (877) 908-2227 and the National Foundation for Credit Counseling at (866) 698-6322. Counselors should help borrowers assess their current situation and understand how a reverse mortgage will affect their lives. Another key tool is a reverse mortgage calculator, which can be found through search engines such as google.com. Avoid relying on only one calculator. Instead, use multiple free reverse mortgage calculators and average the results.
  
  

Considerations

• Qualifying properties include single-family homes, such as a house or townhouse, duplexes, mobile homes and condominiums. In most cases, lenders will request appraisals to determine the current market value of a borrower's home. Borrowers can use the money that they receive from the reverse mortgage in any way. Lastly, borrowers should realize that if they move out of their home, the reverse mortgage will be due.