Making Sense of Reverse Mortgages

Many senior citizens purchased their home while in their 20s or 30s. They faithfully made every mortgage payment for 30 years, and once they hit the age of retirement, they own their home free and clear. Now that they are in their golden years, they may be sitting on years of accrued equity as well as a home that has probably greatly appreciated since they purchased it 30 years ago. For some, they choose to tap into the value of their home with a reverse mortgage.

With a reverse mortgage, a home owner (that's at least 62 years of age) can convert the worth of their home into cash. The requirements for a reverse mortgage are minimal, and standards such as credit and income usually do not apply in this situation. Furthermore, you may even qualify for a reverse mortgage if you do not own your home free and clear, depending on the equity and value of your home. Although most people only think of single family homes when it comes to mortgages, you may also get a reverse mortgage on properties such as manufactured homes that were built after June 1976, condominiums, townhouses as well as 2-4 unit properties. The income from a reverse mortgage may not affect your regular Social Security or Medicare benefits, but it could impact your eligibility for Medicaid.