Is A Reverse Mortgage Right For You?  

A reverse mortgage could be the perfect retirement solution for you.

A reverse mortgage is a mortgage (a loan on a house). However, unlike a standard mortgage (also called a forward mortgage), where you pay the bank something every month, a reverse mortgage means the bank pays you, the homeowner.

Why would a bank pay you, and not the other way around? Essentially, the bank is lending you money and accumulating interest on the loan. Unlike a standard deal, however, you remain in your home, and you cannot owe more than the house is worth. The loan is not due until you move out of the house or pass away, and not one moment before, as long as you maintain the home and pay items such as property taxes.

The reverse mortgage is worth noting because it is an excellent source of retirement income for many people, particularly those with a lot of equity in their homes.

Not everyone is eligible for this financial tool. Gratefully, determining eligibility is relatively straightforward for most people. To see if you qualify, just run through this basic checklist.

1. Is everyone on the home's title at least 62 years old? Reverse mortgages are available only to those age 62 and older. Although eligible at 62, many people choose to wait until about age 70, since the older you are, the more money available. If you have adult children on your home's title, they may have to be removed before you can be eligible for a reverse mortgage. But the relationship of the people on the title doesn't matter -- it can be husband and wife, partners, friends, or any other relationship. 2. Do you own your own home? You should have at least $50,000 in equity in your home; otherwise, you may not get enough money to justify the cost of obtaining a reverse mortgage.

3. Is the home your primary residence? Your primary residence is where you vote, collect mail, file your taxes, and sleep more than half of the year. You can obtain a reverse mortgage on your primary residence only.

4. Is your home a single-family residence, condominium, townhouse, manufactured home, or one unit of a multi-unit property you own? Or, if you reside in New York, do you live in a co-operative building? (New York residents are the only people who can receive a reverse mortgage on a unit in a co-operative building.)

5. Is the home in the United States? Similar programs are available in Canada and Europe, but reverse mortgages financed in the United States must be for a home within the United States. 6. Are us a US Citizen, or do you have a Green Card? You must be a citizen or able to live in the United States.

If you answered yes to every question, a reverse mortgage might be the right financial tool for you.

Although eligibility is simple, however, there are a number of reverse mortgage options, from the type of loan to the type of payments (e.g. monthly or lump sum, for example). These choices can be used to tailor the reverse mortgage to suit your own personal circumstances. For more information on the details of reverse mortgages, visit my web site, www.ReverseMortgageBook.com, and order my book, Reverse Mortgages -- Cash for the Rest of Your Life!

About the Author

Greg Patti has spent his life presenting complicated information in a direct, straightforward, and readily understandable style. A successful Certified Public Accountant (CPA), Greg is a member of various CPA societies and organizations.