Reverse Mortgages
A reverse mortgage, sometimes called “home equity conversion mortgage” (HECM), can be a source of funds. Reverse mortgages enable homeowners to use the equity in a home as security for a loan, paid to them as monthly payments or in a line of credit, to be called on as needed, up to the approved limit. The funds may be used for anything.
To be eligible, at least one of the homeowners must be 62 or older and must reside in their single-family home. A HUD-approved condominium is also eligible for the program. The person who applies for the reverse mortgage must own the property.
The reverse mortgage applicant must attend consumer education and counseling by a HUD-approved HECM counselor. The reverse mortgage has to be the only mortgage on the property, but if there is already one mortgage on the home, it can often be paid off with the reverse mortgage. The reverse mortgage can also be used to pay for some of the repairs that might be needed to make the home qualify for the reverse mortgage.
A reverse mortgage isn’t appropriate for everyone, but it can be a good decision for some. It can take a few months to go through the application process for a reverse mortgage, and the closing costs are more than on a traditional loan. If you are considering a reverse mortgage, consult with a legal or financial expert you trust. Counseling about reverse mortgages is available from the Urban League. You can get more information from HUD (U.S. Department of Housing and Urban Development) at www.hud.gov. You may also obtain reverse mortgage information by ordering Reverse Mortgage Loans: Borrowing Against Your Home on the AARP web site or call 1-800-209-8085.
Next: Funeral Planning
Back: Public Programs
