Business & Finance mortgage

Facts on Reverse Mortgages

By Business & Finance Last updated Thursday, May/30/2024

Features

A reverse mortgage loan is not paid monthly by the borrower. Instead, the borrower is paid by the bank, whether in an upfront cash advance, monthly cash advances or a credit-line extension.

Eligibility

To be eligible, the borrower must be at least 62 years old. He must own his home outright or have a very low mortgage balance, and it must be his primary residence.

Repayment

A reverse mortgage loan does not need to be repaid until the borrower sells the home, leaves the home permanently or dies.

Income Requirements

Because approval is based on the home's value and the age of the borrower, no minimum income is required to qualify.

Security

Because the borrower is not making monthly payments, as long as insurance and tax payments are kept current, the borrower cannot lose her home.

Caution

A reverse mortgage is a large commitment that requires careful consideration. Borrowers should consider every option, especially because fees and interest rates can be high.

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