What is a Reverse Mortgage? by:Stuart Simpson

Simply stated, a reverse mortgage is a loan that enables homeowners (age 62 and older)

to convert part of the equity in their home into a tax-free income without having to sell the home, give up the title, or take on a new monthly mortgage payment. More and more homeowners are using this to supplement their retirement income, pay for health care, modify their home, or just get some cash for emergencies. Since this is a new product, some people have misconceptions of what a reverse mortgage is. The bank doesn't give you money and take your house. Let's look at some of the most common questions.

Are reverse mortgages for desperate people? No. It is an excellent financial planning tool used from people of all walks of life.

How do I qualify? You must be 62 or if both parties are on the mortgage, then you both must be at least 62. And, you must have equity in your home.

What if I still owe on my home? You may still qualify even if you have a balance on your first mortgage. The proceeds must be used to pay off the mortgage, first.

How much can I get? This depends on several factors such as, the age of your home, the value, your age at the time of closing, and interest rates.

Is it just monthly payments? No. You can get a lump sum, line of credit, monthly payments or a combination of monthly income and a line of credit.

But, won't I have to pay taxes on these monthly payments to the government? No. The funds are tax-free. Its your money, not additional income.

Should I seek a lawyer or receive some counseling before I get a reverse mortgage. Yes. You must be counseled before receiving a reverse mortgage. You don't have to talk to a lawyer or accountant, but it would be advised.

Who owns the title to my house? You still own the title.

What happens when I die? Once your home is passed on to your heirs, the mortgage becomes due. Your heirs may pay the mortgage and keep the home or sell the home and pay off the home. They may keep any excess sales proceeds.

What if I owe more than the house is worth? You can't. Your repayment amount will never exceed the value of the home at the time the loan comes due. Also, there are no prepayment penalties.

What if I move? If you move, then the mortgage becomes due and must be repaid.

Where can I learn more? The National Reverse Mortgage Lenders Association at http://www.reversemortgage.org

About the author

Stuart Simpson has a neat mortgage calculator FREE to use. Try it out at:

http://www.mortgage-refinance-review.com/calculator.php

POST COMMENT

Getting An Offshore Bank Account Via The Internet by:T. O' Donnell Simple Tips On Getting Your Loan by:T. O' Donnell Leading Bad Actors To Be Good Performers by:Brent Filson Stock Market Retirement Investment Plan by:Charles M O'Melia Project Office: Help or Hindrance? by:David Stoneman Self Employed Mortgage Loans - A Survival Guide by:Fabio Marcell A Step-by-Step Approach to the Federal Acquisition Marketplace by:Gloria Berthold No Money! Does It Really Matter? (Free E-Books) by:John Michael Tips For Making Your "Work at Home" Business Work For You by:Lakshmi Menon How To Accept Credit Cards by:Matthew Coers Offshore Investing by:Murray Priestley Setting Parameters at Work to Enable Achievement of Your Goals by:Susan Edwards Year 2010: Permanent Employees Not Needed Anymore by:Burak Fenercioglu