by Donna Thacker

Created on: August 22, 2008

You hear about reverse mortgages on every television station you turn on. You receive mailings telling you what a great deal reverse mortgages are. The advertisement repeatedly tells you that you never have to pay the reverse mortgage back, but adds the phrase "so long as you live in the home."

This is all very true. While doing research for an article on reverse mortgages, I read everything I could find on the subject of reverse mortgages. I found a lot of pro's and con's that anyone even thinking about a reverse mortgage really needs to think about.

So, what exactly is a reverse mortgage, and how do you get this supposedly free money? First, there are qualifications to be met. The homeowner that applies for the reverse mortgage must be at least 62 years old. The spouse must also be 62 or over. The program advises that you can "get around that" by having your younger spouse quit claim their interest in the home over to you.

The problem with that is that if the person that qualifies for the reverse mortgage must leave the home, either to go to a healthcare facility, or to death, the remaining spouse virtually has no interest in the home. Once this happens, the reverse mortgage company wants their money paid back, because the qualifying homeowner know longer resides there.

Remember that they tell you that you never have to repay the money so long as you live in the home. So this money will in fact have to be paid back by someone, at some point. Most likely, by your heirs when you either pass away, or are permanently moved to an elder care facility.

Another qualification is that you must have a substantial amount of equity in your home. Still owing a mortgage on it is acceptable, but it needs to be nearly 70% or more paid off. The reverse mortgage will go ahead and pay off the balance, and include that in your reverse mortgage loan.

The reverse mortgage will pay you in several different ways. You can opt for monthly payments sent directly to you, a lump sum payment, or a line of credit that can be drawn on as you need it. This reverse mortgage payment comes with an interest rate tacked on to it too. The actually amount of interest will depend on the facility that executes your reverse mortgage. Certain facilities also include closing and or banking fees into the amount of the reverse mortgage.

Let's not forget that you will only qualify for the equity amount that your home is worth. So, once the interest rate and various fees are added in, the amount of money you can

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