Understanding Reverse Mortgages

A reverse mortgage is an increasingly popular consumer loan for senior homeowners age 62+.
It allows these senior homeowners to tap into the home equity that has been built up.
There are no monthly mortgage payments, but homeowners are still responsible for paying property taxes, insurance, and maintenance.
The repayment of the loan is deferred until the homeowner dies, sells, or moves out of the home.
Because there are no monthly mortgage payments and homeowners can generally receive their home equity as tax-free cash this particular type of loan has seen over 1,000,000 seniors take advantage.

Pros:

You continue to live in your home and retain title to your home as long as you continue to pay your property taxes, insurance and maintenance.
You generally receive the proceeds of the loan as tax-free cash in which you can use the money as you see fit. It is recommended to speak with your financial advisor to verify your specific situation.
A reverse mortgage is a non-recourse loan. Neither you nor your heirs are liable for any amount of the mortgage that transcends the value of your home.
You choose the disbursement option. There are several ways in which you can receive the proceeds of the loan.
Many lenders offer a free reverse mortgage loan calculator which allows you to get an estimate as to how much you may qualify for.

Fees associated with the loan are generally higher than with other financial products. You should ask your lender about options available.
The balance of the loan increases over time as does the interest on the loan and the fees associated.

Research and identify companies that may be right for you. Fill out an online form or give them a call to start the process.
Discuss what options may be available to you; what you may qualify for; what the time required to close your loan looks like and to have your questions answered.
Attend a counseling session from a licensed third-party counseling agency. Housing and Urban Development (HUD) maintain a list of counselors available in your state.
Complete an application with the company that you’ve selected. This is similar to a traditional forward mortgage in that you fill out several pages of documentation to formally apply.
Underwriting and loan processors than take over and handle everything from getting your house appraised to ensuring that all of your paperwork is in order.
Close your loan and choose your disbursement options. At this stage, you’ve completed the process and can now choose exactly how you’d like to receive the proceeds of the loan and when.