Last Updated: April 2, 2013
What is a Reverse Mortgage?
A Reverse Mortgage - also called a Home Equity
Conversion Mortgage (HECM) -- is a type of loan for homeowners over
the age of 62 that turns the equity saved up in a home into
When someone secures a Reverse Mortgage, they are able to use
the money from their home equity while also living in and retaining
ownership of the home.
Can a Reverse Mortgage be Used to Age in Place?
The proceeds from a reverse mortgage can be used for any purpose
and many seniors secure a reverse mortgage to help them stay in
their own home as they age. In fact, a requirement of a reverse
mortgage is that the homeowner(s) occupy the home.
Common uses of reverse mortgage benefits include:
Paying for skilled nursing or other in home care.
Funding out of pocket medical expenses.
Improving or modifying the home to make it more suitable for a
Who Qualifies for a Reverse Mortgage?
Eligibility for a reverse mortgage is determined by three
primary factors. The borrower(s) must:
What are the Financial Benefits of a Reverse Mortgage?
Most seniors secure a reverse mortgage to improve their
financial situation. A reverse mortgage can both reduce expenses
and increase available cash.
Eliminate Mortgage Payments: If the
homeowner(s) is eligible for a Reverse Mortgage, then the loan pays
off the balance on the existing mortgage - eliminating all monthly
mortgage payments. This alone can dramatically reduce monthly
expenses and allow the cashflow to be used for in home care or
Access Cash Benefit: If there is enough equity
in the home, homeowners can also receive a cash benefit which can
further supplement income.
How Much Money is Accessible with a Reverse Mortgage?
The amount of money a senior can secure with a reverse mortgage
is determined using a calculation that takes into account the
homeowner's age, current interest rates, the appraised value of the
property, any outstanding mortgages or other liens on the property
and the maximum loan limits as determined by HUD and the FHA.
Is There a Downside to a Reverse Mortgage?
The fees for Reverse Mortgages are marginally higher than those
incurred with a traditional mortgage.
What is the Best Way to Find a Reputable Mortgage Lender?
A Place for Mom has partnered with NewRetirement, a trusted
source for finding prescreened Reverse Mortgage lenders.
NewRetirement pre-screens lenders and only refers borrowers to
brokers who are licensed by the Department of Housing and Urban
Development (HUD), adhere to the National Reverse Mortgage Lender
Association (NRMLA) guidelines, have a clean record with the Better
Business Bureau and are verified as reputable by at least two