Reverse Mortgages

A reverse mortage is a mortgage used to get some of the home equity in a form of advance loan.  The money is repaid when the house is sold or when the borrower dies or moves.

When the home equity is used in a reverse mortgage, the equity built up in the home decreases.  In a regular mortgage, it is the opposite, home equity increases while the mortgage is being paid.  Mortgage payments are also defered as long as the person borrowing is living in the house.

Depending on the value of your house, interest rate of current mortgage and your age, the amount you can get out of your home equity can change.

Also, there are three types of reverse mortgages -- home equity conversion, propriety reverse and single purpose reverse mortgage.  If you get a single purpose reverse mortgage, you can only use this money for things like home improvements or property taxes.  Any other reverse mortgage type can be used for anything.

In order to qualify for a reverse mortgage you must be 62 years old or more, live in the house and have some home equity built up.  you must keep the title of the house in your own name and you still need to pay the insurance, taxes and maintain the property.  Then, when the house is sold, any money made is used to pay off the reverse mortgage first.