What is a reverse mortgage and its benefits

A reverse mortgage is a unique, and often misunderstood, home equity loan that has been tailored specifically for home owners over the age of 62. This type of mortgage differs from a conventional mortgage in several key ways; with the age restriction being just the first requirement of qualification.

Over the years of making mortgage payments you build up equity in your home; that equity can be withdrawn to provide you, the homeowner, with funds that can go a long way in assisting with your standard of living, lowering your medical bills, make improvements on your home, or even towards that dream vacation you've been putting off.

Qualifying for a conventional mortgage requires you, the borrower, to have a good debt to income ratio; that means that your income level must allow you to make the monthly mortgage loans payments easily, while not impacting your ability to repay other debts and bills such as car payments or utility bills.

To qualify for a reverse mortgage you are not required to meet income eligibility guidelines; you can qualify regardless of your income levels.

In addition to being a home owner of at least 62 years of age, the borrower needs to either completely own their home outright (i.e. no open mortgage account) or have a mortgage with a low balance. The balance must be low enough to be paid off in full at the time you close, with the proceeds from your reverse mortgage.

Another key requirement is that the home needs to be your principal residence; you cannot obtain this type of mortgage on rental properties or any other properties you may own but do not reside in.

However, you can use the money obtained from the equity to purchase additional properties. There are no restrictions as to what the money can be spent on.

The reverse mortgage does not need to be repaid to the lender as long as you, and other approved borrowers, use the property as your primary residence. The reverse mortgage will not cover expenses such as insurance or property taxes like a conventional mortgage account would; there is no escrow account to handle those expenses.

When the house is sold, either by yourself or your estate, the reverse mortgage will need to be paid back in full. Any remaining equity, should there be any, will be paid out to you or to your estate.

Consult with a financial advisor to find out if a reverse mortgage is the best option to meet your home equity loan needs.

Take a look at the "Reverse Mortgages" section of my website: www.mortgage-bankloan.com/category/reverse-mortgage/ to learn about this unique type of loan that you may benefit from.

Check out http://www.mortgage-bankloan.com for more great information on a wide variety of topics. We have information on: Cash-out Refinances, Home Equity Loans, Reverse Mortgages and much much more. Are you a new home buyer? We have information for you too! Learn about the $8,000 Obama Tax credit for first time home owners, or find out how much you really need to put down on your first house.