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To qualify for a reverse mortgage, you must be at least 62 and have paid off all or most of the home mortgage. Earnings is usually not a factor, and no medical tests or healthcare histories are required. Should you seek an HECM, you also must undergo free home loan counseling from an independent government-approved "housing agency." Financial institutions offering proprietary reverse mortgages might require similar counseling or home owner education.

The quantity you are able to borrow depends on your age, the equity in your home, the value of the house, and the curiosity rate. If it's an HECM reverse mortgage, federal law limits the maximum amount that could be compensated out.You can be compensated in a lump sum, in monthly advances, via a line of credit, or a combination of all three.

Common Functions
Reverse mortgages offer unique appeal to older adults simply because the loan advances, which aren't taxable, usually do not affect Social Security or Medicare benefits. Depending on the plan, reverse mortgages usually allow homeowners to retain title to their homes until they permanently move, sell their home, die, or reach the end of a pre-selected loan term. Generally, a move is considered permanent when the home owner has not lived in the house for 12 consecutive months. So, for instance, a person could live in a nursing home or other medical facility for up to 12 months before the reverse home loan would be due.

Nevertheless, be aware that:

· Reverse mortgages tend to be a lot more costly than traditional loans because they are rising-debt loans. The curiosity is added towards the principal loan balance each month. So, the total quantity of interest owed increases substantially with time as the curiosity compounds.

· Reverse mortgages use up all or some of the equity inside a house. That leaves fewer assets for the homeowner and his or her heirs.

· Lenders generally charge origination fees and closing expenses; some charge servicing fees. How much is up to the lender.

· Interest on reverse mortgages is not deductible on earnings tax returns until the loan is paid off in part or whole.

· Because homeowners retain title to their house, they remain responsible for taxes, insurance, fuel, maintenance, and other housing expenses.

Tags: home, loan, mortgage, reverse mortgage