by Dell Claiborne
What is a reverse mortgage and how can I qualify for one?
Reverse mortgages became very popular during the real estate boom of the early 2000’s. You see, the only way to really get money out of your home is to sell it or borrow against it. Reverse mortgages gave many older homeowners a way to borrow the accrued equity from their homes without having to repay the loan for as long as they live in the home. Reverse mortgage is sometimes called a lifetime mortgage. The loan can be taken in monthly payouts, or in one lump sum, depending on the lender’s policies and your needs. Reverse mortgage borrowers must repay loans with interest in the event of the death of the borrower, the sale of the home or if the borrower permanently leaves the home. An example of permanently leaving would be to enter an assisted living facility.
To qualify for a reverse mortgage, a borrower must be at least 62 years old and own the home debt-free. The home must also be the borrower’s primary residence and he must occupy it for at least half of the year. Due to decreases in home values, reverse mortgages have become less prevalent in our current market. I would advise that you not only consult with a mortgage lender or bank, but also a tax professional to help you make an informed decision and are aware of any tax complications that may arise from a reverse mortgage.