Reverse Mortgage Loan Blog

Greensboro — When injury prevented 62-year-old George Watlington from working in his auto shop, he started looking at a reverse mortgage as a possible source of income. “I don’t know all the particulars, but I’m studying it,” said Watlington, pouring over a stack of loan papers. “I don’t sign a document unless I understand what it is.

“Watlington is one of an increasing numbers of seniors considering reverse mortgages, according to Chris Stearns with the U.S. Department of Housing and Urban Development. “For people that may need a little bit more to supplement their income and they have a home with the equity just sitting there, I think it’s a great opportunity,” said Sterns. “We highly recommend people get housing counseling.”

How does a reverse mortgage work? “This is not like a home equity line of credit,” explained Stearns. “This is actually a separate mortgage.” He said a reverse mortgage allows seniors to tap into the equity in their home without having to repay the loan as long as they reside in the home.

Who can qualify for a reverse mortgage? Most lenders require applicants to be 62 years old or older, own their own home and reside in their home, according to the AARP. “It’s for somebody that has paid off their mortgage or has substantial equity to start with,” added Sterns. “The amount that you can take out is based on your age, interest rate and how much equity you have in your home.”

How is the reverse mortgage paid? According to Stearns, seniors would only have to repay the loan if they sold or moved out of their home. Otherwise, after the loan recipient dies, the loan would be repaid through their estate.

“Right now, I’m looking into it,” said Watlington, who hopes to use the reverse mortgage to make improvements to his home. “So far, it sounds good.”

If you are interested in a reverse mortgage, you can find a HUD-approved housing counselor by calling 1-800-569-4287.

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