Reverse Mortgages

Reverse mortgages are a new type of mortgage designed specifically to be appealing to older homeowners. In regular mortgages, the homeowner pays the lender. In reverse mortgages the opposite is true – homeowners receive money that does not need to be repaid until the home is sold, the homeowner dies, or does not use the home as the primary residence.
There are advantages to reverse mortgages, including:

• tax advantages.
• supplemental retirement income.

They may be a good idea for a homeowner who has a great deal of equity in their home but no other assets or sufficient retirement savings, and wishes to stay in their home rather than downsize.
There are other factors to consider. If you dream of giving your home to your children after you die, a reverse mortgage may make that difficult since the equity in the home will have been depleted.
Reverse mortgages require research to make sure it is right for each homeowner, and there are usually requirements, such as:

• The homeowners must be at least 62 years of age.
• The home must be the primary residence.

Beware of Fraud

Reverse mortgages are a legitimate type of mortgage designed to help older Americans in their later years. However, because they are new and not always well understood, some unscrupulous individuals use reverse mortgages to rob seniors of the equity in their home. Beware of the following:

• Someone who is selling something like an annuity and suggests that a reverse mortgage is a good way to pay for it.
• A mortgage that you do not fully understand or are not sure you need.

If you are unsure of what you are signing, don't sign anything. And remember, you have three days after signing to change your mind with no penalty.