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What Is a Reverse Mortgage?

A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you.

But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower no longer use the home as their principal residence.

A reverse mortgage is a federally-insured private loans that is a safe, yet expensive plan to give older Americans more financial security.

Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements, and more.

Reverse mortgages are becoming more and more popular - especially in United States. But since your home is largest asset and the most important one as well, it is wise to find out more about this type of loan before applying for it.

Do You Qualify for a Reverse Mortgage?

To get a HUD reverse mortgage, you must be 62 years of age or older. You also need to have your own home. If you have used mortgage to buy your home, only a small part of it must be remained.

Not all home types are eligible though. Your home must be a single family dwelling or a two-to-four unit property that you own and occupy.

Townhouses, detached homes, units in condominiums and some manufactured homes are eligible.

How a Reverse Mortgage IS Different from a Bank Home Equity Loan?

When you want to get a traditional second mortgage or home equity loan, you must show proof of sufficient income and also a good credit score to qualify for the loan.

But a reverse mortgage is different as it pays you - no matter what your income is or how is your credit score.

On the other hand, the later expenses and dangers of reverse mortgages are a lot. So that's why it is always recommended to make sure you can't get the money you need through other ways rather than this one.