Reverse Mortgage Loan Blog

Q: I keep hearing information on reverse mortgages. I am 66 years old and own my house outright. Is this something I should investigate?

A: Before taking action, consult with an estate-planning attorney and an accountant to understand your tax consequences, to determine how your benefits may be affected, and to make estate arrangements.

A reverse mortgage is a home loan whereby a homeowner can access the equity in his home. Usually, the homeowner retains title to his home. Eligible homes include a single-family or a two- to four-unit, but other properties may qualify. Repayment occurs when the home is sold or is no longer occupied as your primary residence.

Requirements include that you need to be at least 62 years of age, own your home outright, or have a low mortgage balance that can be paid with closing proceeds from the reverse loan.

The amount you can borrow depends upon your age, the value of your home and other factors. Payments are usually structured monthly or on dates of your choosing. Lump sums or credit lines may also be available. However, compare a reverse mortgage to selling your home or purchasing an annuity.

Be cautious of lenders who advise against talking to an attorney or family members, who pressure you, or who request a large deposit. For concerns, contact the state Attorney General’s Office - the Springfield office number is (413) 784-1240 - and the Division of Banks (toll-free consumer hotline: (888) 283-3757.

This response was prepared by Kyle R. Guelcher, at-large director for the Young Lawyers Division of the Massachusetts Bar Association and a solo practitioner in Springfield concentrating in the areas of debt collection, civil litigation, business legal service and intellectual property.

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