by M Kayo

Created on: November 28, 2009

Reverse home mortgages are becoming very popular in the U.S. Also known as a Home Equity Conversion Mortgage (HCEM), these loans allow you to take money based on the amount of equity in your home. A Reverse home mortgage allows you to convert a portion of the equity that has built up in your home over the years. This reverse mortgage does not have to be repaid as long as the principal owner of the home resides in the home. These reverse mortgages can provide an additional layer of security for older American homeowners. Many folks use the extra money as a supplement to social security or retirement income, to pay unexpected medical bills, to make improvements on the existing home, or for any reason at all.

Are you eligible? Here are the requirements:

You must be a homeowner at least 62 years old
You must own your home outright, or have a low enough mortgage balance that can be paid off with proceeds from the reverse mortgage
You must live in the home
Your home must be a single family dwelling or a 1-4 unit home with one unit occupied by the borrower
Some HUD approved and FHA approved manufactured homes may also eligible
You are required to get information from an approved HECM counsellor

Steps to Get Your Reverse Home Mortgage:

Meet the qualifications listed above.

Consider all your options. Talk with a trusted family member or financial expert who knows all about these loans and make sure a reverse mortgage is the best option for your specific situation. Check the governments website for additional information here: http://www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm

Figure out how much how much you will need to pay and how much you will get from your home. Use this handy calculator: http://rmc.ibisreverse.com//rmc_pages/rmc_aarp/aarp_ index.aspx

Pick a lender for your reverse mortgage. If you have a good relationship with your current bank, you may want to have them do the loan for you. Take the time to research all rates and services of your bank and other financial lenders as well. You may be able to negotiate a better deal if you're aware of what's available in terms of interest rates and services offered. Be sure to look for fees like origination fees, closing fees, credit report costs, appraisal fees, additional service costs, and any other fees.

After you've done all your homework, all you need to do is submit your application. Good luck!

If you have questions, you can call the Housing Counseling Clearinghouse at (800) 569-4287

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