What Are Reverse Mortgages

Reverse mortgages have been growing in popularity over the past few years, enticing peoples curiosity more and more each day.

A reverse mortgage is a way to augment retirement income. In doing this, the homeowner gets cash from the lender (line of credit, monthly cash advance), and makes no mortgage payments for as long as he or she occupies the home. Reverse mortgages are offered by the Department of Housing and Urban Development, and by Fannie Mae, among a few others.

Taking out a reverse mortgage is similar to taking out a big loan and using your home as collateral. You can take the money as a line of credit, a lump sum, or a combination of the two. When it's time to sell your home, the loan becomes due, and the home is usually sold to pay back the loan.

The benefit of reverse mortgages is that you receive some income during your retirement years. The downfall to reverse mortgages is that you will end up with little or no house to pass on to your heirs.

Reverse mortgages have age requirements, and you must be a homeowner no younger than 62. There are also equity requirements, loan limits, up front fees, and some protections in place for homeowners.

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