What Is A Reverse Mortgage?

One of the best things older people can do with the equity they have built in
their homes over the years is to take out a reverse mortgage. A reverse
mortgage is essentially a loan taken out against the value of the equity you
have in your home. These loans can make the difference between financial
security and an uncertain future as you get older. A reverse mortgage does not
require you to repay it until you move out of your home; this can be a boon to
those who find that Social Security and their retirement savings are not
sufficient to cover their expenses in retirement.

Reverse mortgages have been growing in popularity ever since they were first
introduced in 1961. Every year, the number of reverse mortgages taken out grows
by leaps in bounds. There was a 85% increase in reverse mortgages in the year
2006 as compared to 2005. There were more than 62,000 such mortgages approved by
the United States Department of Housing and Urban Development in 2006.

There are several different types of reverse mortgages which you can select
from; most opt for a HECM, or Home Equity Conversion Mortgage. The Federal
Housing Administration administers and oversees these mortgages. Private
institutions in association with Fannie Mae also offer reverse mortgage
products. If yours is a higher value home, you may want to consider a reverse
mortgage from these reverse mortgage bank lenders.

If you opt for a HECM, then you'll want to be informed. A reverse mortgage
bank will offer counseling beforehand so that you can evaluate if taking out
a reverse mortgage is the right decision for you. A counselor from a reverse
mortgage bank lender can also help you to figure out if you meet the
eligibility requirements and fill you in on the effects a reverse mortgage may
have on your finances. After you receive this counseling, you will be armed with
all of the information you'll need to make your decision. These HECM products
account for the bulk of reverse mortgages taken out form reverse mortgage banks.

If you are thinking of taking out a reverse mortgage, there are some
requirements which you must meet:

You must both own and reside in the property you want to take out a reverse
mortgage on

You must be 62 years of age or older

You are required to have a counseling session prior to taking out the mortgage

If you think that taking out a reverse mortgage may be the right decision for
you, then speak with a reverse mortgage bank lender and find out more.
You and the lender can decide if this is right for you and find the reverse
mortgage product which matches up with your needs.

Kevin Scott Smith is an Article Writer, Reporter, and Product Reviewer for:

Reverse Mortgage Banks