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The decision to take out a reverse mortgage is a personal one requiring much consideration based on reliable information. Several thousand seniors have taken advantage of the reverse mortgage program since its initiation in the late 1980's. These loans help homeowners 62 years of age or older cash in on equity that has built up in their homes. Reverse mortgages give seniors an opportunity to use the proceeds to improve their quality of life, without depleting their savings or going into debt.
A reverse mortgage allows the homeowner to continue to live in the house while using the loan proceeds to make home repairs or improvements, pay medical bills, repay existing debt or take dream vacations. There are no restrictions on the way the money is spent. With very few requirements for eligibility, a reverse mortgage offers a viable option for a sound financial plan. The homeowner decides how to structure the proceeds by choosing from several options. Whether to receive the money in fixed monthly payments, one lump sum, a flexible line of credit or a combination of methods is up to the borrower.
Many factors contribute to the amount of money a homeowner can expect to receive from a reverse mortgage. The lender decides the amount of benefits based on the type of reverse mortgage chosen, the value of the home, the homeowner's age at the time of loan application, current interest rates and possibly the state of residence. Potential reverse mortgage applicants should understand that the actual reverse mortgage amount will be less than the value of the home and is dependent on the percentage approved by the Federal Housing Administration (FHA) in the area.
Even though the homeowner receives a reverse mortgage, the borrower retains the title and any remaining equity. These popular mortgages provide give seniors with an option when considering ways to improve their lives and enjoy the benefits of retirement. Using the built-up equity in their homes can give older Americans a greater sense of financial security. It provides more freedom to do the things they want to do, meet unexpected expenses and supplement social security benefits without the need for getting a job or taking out another loan.