Homeowners 62 years of age and older who have paid off their mortgages or have only small mortgage balances remaining are eligible to participate in what's known as a reverse mortgage program. This program allows you to borrow against the equity or market value of your home so you can use the money to supplement your income. The money you receive from reverse loans can be paid to you in a lump sum, on a monthly basis, or on an occasional basis as a line of credit. Unlike ordinary home equity loans, a reverse mortgage doesn't require repayment as long as you live in your home. Lenders recover their principal, plus interest, when your home is sold. If you sell your house for a price greater than the loan amount, the remaining value of the home goes to you or to your survivors. The total amount of cash you can receive from a reverse mortgage generally depends on your age, your home's value and location, and the cost of the loan. To qualify for a reverse mortgage, you must own your home, be at least 62 years old, and live in your home for more than half the year. You must also pay off any debts against your home before you can obtain the loan. Generally, reverse mortgages are beneficial to older Americans seeking for greater financial security to supplement social security or to pay for unexpected medical expenses. If you decide to take out a reverse mortgage on your home, be aware that you'll still be responsible for property taxes, insurance, and repairs. Failure to take care of these costs can result in the lender asking for the immediate and full repayment of the loan.
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