Reverse Mortgage Loan Blog

Dear Bruce: I wish you would give us a general talk about reverse mortgages. I am not sure I trust the advice I receive from someone who is selling them. Are there special criteria that set candidates apart? M.T, via e-mail

Dear M.T.: A reverse mortgage is useful for some people. In essence, it is borrowing against the equity you have built up in your home and receiving payments on a monthly or quarterly basis. Such indebtedness is to be paid upon your demise. Your heirs have an option to pay off the mortgage, whatever the mortgage balance is, or, alternatively, the house can be sold and the mortgage balance paid and the residual becomes part of your estate.

Reverse mortgages are not for everybody. They are available at age 62, but since the life expectancy of someone so young is considerable, the amount of money one can draw out is materially lessened. For people in their late 70s or 80s, a reverse mortgage often becomes a viable method where they can stay in their home and not have to be burdened with payments during their lifetime. As with all tools and financial products, there are appropriate and inappropriate uses. The responsibility for making that determination falls on your shoulders.

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