Reverse Mortgage

Information OnLine Reverse mortgages are a valuable tool that allow seniors to home's equity. I there are trap By Robin Schard ike spinning hay into tap their gold, reverse mort-gages allow seniors to-owever, transform equity in their home into liquid s for the assets. As the princess found out in the fairy tale, however, it is unwary. never that simple. Generally speaking, a reverse mortgage allows homeowners over the age of sixty-two to take a mortgage on their home. The homeowner receives money, but, unlike a normal mortgage, the homeowner does not begin pay-ing back the loan. The loan is paid back when the homeowner no longer resides in the home because the property is sold, the owner moves elsewhere, or the owner dies. The lender does not take the title to the house, and the amount of repayment cannot exceed the value of the property. Of course, there are many little details. For example, the mortgage must be on M.L.S., is the senior's principal residence, rvices at the there must be little or no debt out-aw Library. standing on the property, and the loan might become due if the owner fails to maintain the prop-erty or does not pay taxes and insurance. The age of the owner, the value of the home, and the loca-tion of the property determine the amount of the loan. The loan can be paid out in a lump sum, as monthly payments, or as a credit line. The interest on the loan is added to the principal, and as with other mortgages, there are origi-nation fees, plus closing and other costs. There are basically three types of reverse mortgages. The first is the FHA-insured Home Equit