How does a Reverse Mortgages Differ from a Home Equity Loan?

Reverse Mortage FAQ >>> How does it differ from a Home Equity Loan?

The main difference is that with a reverse mortgage, you do not have to pay any of the money back, as long as you are living in your home.

With a home equity line of credit, you must have sufficient income versus debt ratio to qualify for an equity line loan.  If you qualify, you are required to make monthly mortgage payments.

With a reverse mortgage you are paid, and the money is available regardless of your current income. The amount you are eligible for depends on factors such as your age, the current interest rate, and the value of your home. A general rule to go by is, the more valueable your home is, the lower the interest rate and the older you are makes you eligible to borrow more money.

You don't make payments, because the loan is not due as long as the house is your principal residence. With an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment".

Reverse mortgages have been around since the late 1980's, but it wasn't until fairly recently that AARP and the FHA combined efforts to revamp them into something which was both safe and advantageous to senior citizens.

The highlights of reverse mortgages are:

• You can convert some of your home's value into tax free cash
• You don't have to repay any of the loan for as long as you continue to live in your home.
• The title to the home remains in your name. The lender does not become the owner.
• The money you receive from your reverse mortgage does not affect your Medicare or Social Security.
• Your heirs will be able to inherit the home after you pass away.
• You can never owe more than the value of your home.
• You can sell your home anytime you want.