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GENERAL RULES THAT APPLY TO REVERSE MORTGAGES

• To qualify for a reverse mortgage, you must own your home.
• The amount you are eligible to borrow generally is based on your age, the equity in your home, and the interest rate the lender is charging.
• Because you keep the title to your home, you are responsible for taxes, repairs, and maintenance.
• Depending on the reverse-mortgage plan you choose, your reverse mortgage becomes due, with interest, when you move, sell your home, die, or reach the end of the selected loan term.
• The lender does not take title to your home when you die, but your heirs must pay off the loan. The debt is usually paid off by refinancing it into a forward mortgage (assuming the heirs are eligible) or with the proceeds from the sale of the home.
• A real benefit of reverse mortgages is that borrowers can live in their homes as long as they like, even after they have completely exhausted their equity. Borrowers must do their best to maintain the value of the home with diligent upkeep.

RISKS OF REVERSE MORTGAGES

The reverse mortgage is not without risk and negative aspects. Knowing the pros and cons will help you acquire the best possible deal should you decide to go with a reverse mortgage. Staying informed of your rights and responsibilities as a borrower may help to minimize your financial risks and avoid the threat of losing your home.

The high up-front costs of reverse mortgage make them less attractive.