A reverse mortgage (also called a lifetime mortgage) is a loan to a homeowner that allows the owner to get cash from the equity in the property as one lump sum or multiple payments. A reverse mortgage could work well for a person who has few assets other than a home.
To qualify for a reverse mortgage, the borrower must be at least 62 years old. There are no minimum income or credit requirements, but there are other requirements. Homeowners should make sure that they qualify for the loan before they invest significant time or money into the process. With most reverse mortgages, the money can be used for any purpose. However, the borrower must pay off any existing mortgage(s) with the proceeds from the reverse mortgage. Typically, the loan from a reverse mortgage doesn’t have to be repaid until you move out of the home, the house is sold, or the last borrower dies. When one of these things occurs, the heirs have the option to pay off the loan and keep the property or to sell it to pay off the debt.
Before borrowing, applicants must seek third party financial counseling from a source which is approved by the Department of Housing and Urban Development (HUD). The counseling is a safeguard for the borrower and his/her family, to make sure the borrower completely understands what a reverse mortgage is and how one is obtained. You should contact a mortgage lender or financial advisor if you want more information about a reverse mortgage.