For many families, their home is their largest single investment. Older homeowners looking for ways to raise current income may consider tapping into their home equity by using a reverse mortgage.
A reverse mortgage is a loan available to homeowners age 62 or older and is used to convert part of the home equity in a property into cash without having to sell the home or pay additional bills.
Repayment of the loan is deferred until the owner dies, the home is sold, or the owner leaves (for example, moves to an assisted care facility). Seniors can use the funds for any purpose such as supplementing Social Security, paying for medical expenses or making home improvements.
There are no minimum income or credit requirements, but applicants may be required to get financial counseling.
The lowest-cost reverse mortgages are single-purpose reverse mortgages offered by state and local governments, while private sector reverse mortgages and federally insured reverse mortgages are generally more expensive.
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