These are the questions of so many interested in reverse mortgages …

What is a reverse mortgage?

The answers to some of these questions vary depending upon your particular situation.The answers to some are quite clear and do not vary.A reverse mortgage is not the same as a home equity loan.A home equity loan is paid back in monthly installments and the interest is generally front loaded, meaning your early payments are more interest than principal.A reverse mortgage is not paid back until death or permanent move.A reverse mortgage is a good way to cash out the equity in your home, without having to worry about immediate payback.

A reverse mortgage is not for people under the age of 62. If one spouse is under 62, a reverse mortgage can be obtained, but only if the underage spouse is not on the title.(Doesn’t it feel good to be called underage at 61.)If the younger spouse is not on the title, care must be taken to ensure there is proper insurance on the older spouse, as the loan will come due if and when the older spouse dies.In order to avoid being displaced from the house, the younger spouse must have sufficient funds to cover the repayment.Generally, this is done with life insurance.

A reverse mortgage is most certainly safe.However, special care must be undertaken to make sure all of the facts are clear before obtaining a reverse mortgage.Many consider a reverse mortgage safer than a traditional mortgage because it is considerably harder to default on a reverse mortgage.Keep the property insured and in good repair, with the taxes paid, and default is not possible.In addition, a reverse mortgage is legal.In fact, it is government insured. A HECM or home equity conversion mortgage is a loan that is insured by the government and sold to Fannie Mae.Approximately 90% of all reverse mortgages are of the HECM variety.The other types of reverse mortgage are in many ways just as good and are excellent for other situations.Most people don’t know a reverse mortgage can even be used to purchase a home.