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  • A reverse mortgage, sometimes known as a lifetime mortgage, is a lump sum of money or monthly payments to seniors, based on the equity in their home. The homeowner does not pay back the "loan" until he dies or the home is sold. This allow seniors to stay in their homes and receive an income until they either move into nursing care, sell the home or die.

    Qualifications

    Homes that are eligible for a reverse mortgage are singlefamily homes, two- to four-unit homes, condominiums, manufactured housing built after 1976, and townhomes. Cooperative housing is generally ineligible, according to the National Reverse Mortgage Lenders Association (NRMLA).

    Reverse Mortgage Vs. Home Equity Loan

    Seniors often choose a reverse mortgage instead of a home equity loan because a home equity loan requires proof of income and must be repaid. Basically, if you are over 62 and have equity in your home, you probably qualify for a reverse mortgage.

    Other Benefits

    Getting the money out of a reverse mortgage does not affect Social Security or Medicare benefits. However, if you are on government assistance programs like food stamps or Medicaid, these programs will be affected by the influx of income.

    Counseling

    Anyone seeking a reverse mortgage must receive counseling beforehand. This ensures that you are getting a fair deal and that you consider all of the implications to your financial life.

    Funding

    Reverse mortgages are funded by mortgage companies and banks.

    Source:

    U.S. Department of Housing and Urban Development, Top Ten Things to Know if You Are Interested in a Reverse Mortgage

    National Reverse Mortgage Lenders Association, Reverse Mortgage Q & A

    More Information:

    National Reverse Mortgage Lenders Association

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