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Reverse Equity Mortgages Explained

Reverse equity mortgages should not be confused with traditional "forward" home equity loans, equity lines of credit or 2nd mortgages.

Home equity loans, equity lines of credit and 2nd mortgages need to be repaid on a monthly basis. However reverse equity mortgages require no repayment until the house is sold or the homeowner no longer lives in the house.

The dwelling may be passed on in an estate after the loan is paid off if any equity remains. Heirs do not owe more than the house is worth.

Reverse Home Mortgage

Proceeds from reverse equity mortgages can be distributed by a combination of methods.

  1. Monthly increments
  2. Lump sum payment
  3. Line of credit

How the cash is used is up to the discretion of the homeowner. Since there are no restrictions, the money can be used to pay debts, remodel the house, finance a trip to France, taken as monthly income or tucked away in a bank account.

But remember, once reverse mortgage cash is gone, well... that's the point. It's gone.

Dangers Of Reverse Mortgages

Care should be taken when considering the cost of a reverse home mortgage. Fees eat away at equity. So it is always prudent to get an up-front estimate of all charges before signing paperwork.

Seniors and those assisting should consult a financial planner, tax accountant and/or an attorney to evaluate their individual situation and the lender's contract.

Reverse home mortgage counseling is also highly recommended whether or not required by the home loan lender.

It goes without saying that "buyer beware" is a fitting statement.

Cash Without Monthly Payments

Do you qualify for a reverse equity mortgage? Visit What Is A Reverse Mortgage to learn more about receiving income without a monthly payment during your retirement years.


Tip: You can also use this toolbar to find out more about reverse equity mortgages and other types of home financing information on this site. Enter a word to be instantly guided to the subject you're seeking.

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Ask Kate For Reverse Mortgage Information

I have been asked if homes with reverse mortgage financing can be taken away from the owner? You cannot outlive your mortgage neither can you or your heirs be required to pay back more than the house is worth after it is sold.

Do you have a question about a reverse home mortgage? Contact Kate is specifically designed to answer your questions and create dialog regarding mortgage financing.

Ask Kate now. Every question is a good question.

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TOP OF Reverse Equity Mortgages
Because everyone's needs are different

It is worth saying again. Seniors and those assisting should consult a financial planner, tax accountant and/or an attorney to evaluate their circumstances and the lender's reverse mortgage contact. Reverse mortgage counseling is highly recommended whether or not required by the home loan lender.


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