A Mortgage That Pays You Instead

NEA Today, Jan 2005

It's an all-too-common scenario-seniors on fixed incomes squeezed by inflation and vulnerable to unanticipated large bills.

One solution is to use the home as a source of income by taking out a reverse mortgage. A reverse mortgage allows a homeowner who is 62 years old or older to convert home equity into a lump sum of money, a line of credit, or fixed monthly payments for life. The amount of money you get depends on your age and the value of your home. The older you are and the greater your home's value, the larger the reverse mortgage.

Repayment is not due until the owner dies or sells the house. Heirs must repay the loan, but they need not sell the house.

If you own a home and are 62 or older (or if you have a parent who is), a reverse mortgage could help to generate a little more breathing space in your monthly budget.

For information on rules guiding reverse mortgages, check out the Web site of the U.S. Department of Housing and Urban Development (www.hud.gov). Reverse mortgages also are available from Fannie Mae, a federal agency that buys mortgages. Look in the "Find a Mortgage" sectionofwww.fanniemae.com.