The biggest financial investment many of us make is the purchase of a home. Over time, it pays off with increasing equity, which can be used in myriad ways, including a reverse mortgage.

Many seniors find themselves in a situation where they need to finance long-term care for themselves or their significant other, requiring more savings than they possess. Reverse mortgages can offer aid for you and your loved ones when you need it most. This specialty financing converts your home's value into cash for whatever you need.

The key to a reverse mortgage

Those 62 and older can convert a portion of their home equity into cash without selling it. The main difference between a regular and reverse mortgage is that, with the former, you pay the lender; with the latter, the lender thankfully pays you. By no means does a reverse mortgage offer a free ride. You must pay certain fees upfront, as well as interest added to your monthly balance. Plus, after you and your eligible spouse pass, the loan is due and payable. Your heirs can choose to pay it off or forfeit the home.

The benefits

Your reverse mortgage can be paid out in several ways. These include monthly payments over time; a lump sum, often used for home renovations, like added accessibility; a line of credit; or modified combination, which can include both a line of credit and regular monthly payments. Generally, seniors may borrow up to 70% of a home’s value.

The home must be your primary residence. However, you may live outside of it for as long as a year before your reverse mortgage is due – this includes assisted living facilities and other senior care residences. Your reverse mortgage must be the main debt (other than a regular mortgage) currently held against your home. Qualifying homes include singlefamily; HUD-approved condominiums; two-, three- or four-unit houses partially occupied by the borrower; and FHAapproved manufactured dwellings.

For further information on securing a reverse mortgage, visit hud.gov.

— Lori Berezin
Brand Publishing Writer