Requirements

• The youngest borrower on a reverse mortgage must be at least 62 years old and the property must be the borrowers' primary residence. In addition, you must attend an information seminar to ensure that you fully understand the loan. Your income and credit are not relevant, but an appraisal is necessary to determine if you have enough equity to qualify for the loan.
  
  

Conventional Loan Comparison

• A conventional loan has a monthly payment. A reverse mortgage can pay you a monthly payment for a fixed period or as long as any party on the loan is alive. You will never have a mortgage payment to make as long as you continue to live in your home and pay your other property obligations. These would include property taxes and homeowner's insurance.
  
  A conventional loan requires a monthly payment for the term of your loan. You can sell your home at any time if you have a conventional loan. If you have a reverse mortgage for several years, the interest payments you are not required to make plus the additional funds you receive from the loan are added to the principal. It is unlikely that you would have enough equity remaing to sell the property.
  
  

Advantages and Disadvantages

• The most obvious benefit is that you do not have a mortgage payment. If you have sufficient equity, you can also receive a guaranteed monthly income to supplement your Social Security and/or other retirement income.
  
  In the event that you become disabled or are unable to live in your house for any reason, you will not be able to sell your home and utilize your equity to purchase another home or use the proceeds for any other reason. In addition, if you derive the financial benefits of the loan for several years, your heirs will no longer inherit equity from your property. The lender sells the home and if there are not enough funds to pay off the balance due, the Federal Housing Administration will pay the lender the difference.
  
  

Conclusions

• Reverse mortgages can eliminate monthly mortgage payments and possibly give you an additional income stream for life. If you are struggling to pay your mortgage this type of loan can be beneficial. There are considerable fees you have to pay to obtain a reverse mortgage, but the fees are paid from loan proceeds. The loan approval process is easy if you have sufficient equity, since there are no income or credit requirements.