The Finance Blogger

Reverse Mortgage Loans

Reverse Mortgage LoansMany people are wondering how these Reverse Mortgage Loans work and whether they are a viable option for them.  They may have all of the equity in their homes and little savings outside the home. They need money to live on. Either they have to sell their home which they have lived in for many years or find another solution.

Fortunately, Reverse Mortgage Loans offer another solution to moving, selling or renting a home. They can stay right were they are. They can avoid the stress of leaving the home they may have lived in for many years.

Here is how they work!

How Reverse Mortgage Loans work?

A reverse mortgage loan is the opposite of a traditional mortgage that you might have on your home. Instead of making monthly payments, you use the equity that you have built up in your home to generate income that you can use for personal use, paying bills and other living expenses, or just going on a trip or for medical expenses. Many seniors have a lot invested in their homes in terms of equity. They can draw on this equity from their home by using a reverse mortgage.

Eligibility for a Reverse Mortgage Loans

  • Applicants and borrowers must be 62 years or older
  • The applicant must own their own home outright, or have a low mortgage balance (any mortgage balance is paid off at closing with proceeds from the new reverse loan)
  • There is no income restriction
  • The home you are borrowing against must be the one you live in year round or in other words it must be your primary residence

Payment Disbursement Options

  • Lump sum payment to you, after existing mortgage balance if any is repaid
  • Monthly installments, based on repaying your existing mortgage first.
  • Line of credit, which you can draw on as needed up to the approved amount

Additional Important Details Regarding Reverse Mortgage Loans

  • You retain ownership and occupancy of your home
  • Closing costs and fees can be financed as part of the loan
  • When the loan is due, your heirs have choices: they can repay the loan and keep the house, or sell the house and repay the loan
  • Interest is paid at the time the loan is repaid and the interest may be tax deductible (consult your tax adviser)
  • You will never owe more than the current market value of your home

Reverse Mortgage Program Option

This is a financial option that may appeal to many homeowners who need money. As a result they would prefer to take advantage of this option instead of moving to an apartment or some other location. There are issues which people considering this option should take into account.


  • Use a lawyer to make sure that the mortgage is properly recorded
  • Use a bank that offers these mortgages
  • Avoid using firms that may not be recognized by the Federal Government
  • Recognize that when you finally do sell, there will be less equity available
  • Take Reverse Mortgage Loans into account when planning your estate
  • Consult with an expert financial planner , bank manager prior to making a decision
  • Consult with several experts to get more than one opinion regarding Reverse Mortgage Loans


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