The Age 50 & Above Crowd
A reverse mortgage is a type of home loan for homeowners age 62 and older that allows the owner to access the equity they have in their homes. The difference between this type of loan and other home loans, is that a reverse mortgage requires no monthly mortgage payments, unless the borrower chooses. The payments can be deferred until the homeowners sells, moves out of the home, or passes away.
Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years. However, the borrower (or the borrower's estate) is generally not required to repay any additional loan balance in excess of the value of the home.
There is a special type of reverse mortgage known as a HECM for Purchase, which allows older Americans to buy a new home by putting a reverse mortgage on it.
Many seniors are "house-rich and cash-poor". Meaning they own their homes free and clear - or nearly so - but have limited funds to live on. A reverse mortgage may offer solutions and opportunities to an elder that he isn't even aware is available. The government does require potential borrowers to take an approved counseling course before applying for the loan.
Having interviewed and worked with a number of reverse mortgage specialists, my go-to reverse mortgage specialists are Ryan Kleis and Robert Ross with Reverse Mortgage Educators. You can learn more about their services by visiting their website here.
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