A
reverse mortgage is a loan against a home that
requires no repayment as long as it is the
borrower's principal residence.
Borrowers
must own their home and all owners must be at
least 62 years old.
Generally,
the amounts available increase with the age of
the borrower and the value of the home.
Borrowers
still own their home and must keep insurance and
property taxes current. Loan advances are not
taxable -- they are disbursements of principal,
not income.
Reverse
mortgages are "non-recourse" loans
which means that the amount due can never exceed
the net selling price of the home.
If
borrowers live beyond their life expectancy (by
definition half of us will), a reverse mortgage
can be a very favorable choice. If the
borrower dies prematurely, their total annual
loan cost can be high.
You
should work with counselors and lenders that use
Ibis software since they can show a potential
borrower all of the costs and benefits of
primary reverse mortgage programs.
Two
good programs are the federally-insured Home
Equity Conversion Mortgage (HECM)
and Fannie Mae's HomeKeeper®
mortgage.
These
loans become due, and the income stops, when the
borrower's home is no longer their principal
residence.
Before
running this website's calculators, click benefitsto learn of some of the ways reverse
mortgages can help you and how they compare to a
regular home equity loan.
