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Reverse Mortgages. Who are they right for?

May 12, 2011

A Reverse Mortgage is a special home loan program for people over the age of 62 and it allows these homeowners to convert some of the equity in their home into cash. They will not have to repay any of the principal or interest with this program, like normal home equity loans or second mortgages, as long as they continue to live in their home as their primary residence. (The borrowers are still responsible for real estate taxes, insurance and the normal upkeep of the home.)

You do not have to qualify for this loan based on credit and income since you are not making monthly payments. The amount you can borrow is based on your age, current interest rate, and the amount your home appraises for. The bank does not buy your home or take title to your home with this particular program and you can repay it at any point in time. There is a HUD counseling that is required before you can complete the reverse mortgage, this is so that people will be fully aware of the program and to help make sure it is right for their individual needs.

This loan is available to help seniors have a greater sense of financial security, it can help supplement social security (those on a fixed income), assist with medical expenses, make home repairs/improvements, and simply allow them to continue living comfortably in their own home.

Repayment is due when the individual is deceased, sells the home, or when the home no longer becomes their primary residence. When the house is sold, you or your estate will then repay the cash received from the reverse mortgage, the remaining equity in the home, if any, belongs to you or to your heirs. For more information on reverse mortgages you can contact our Reverse Mortgage Advisor, Lee Croteau at 540-459-3707 or lcroteau@vbsmortgage.com.