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Reverse Mortgages for Seniors


Photo courtesy of www.pedbikeimages.org / Dan Burden
A reverse mortgage is a special type of loan available to seniors to convert the equity in their homes into cash. The reverse mortgage is aptly named because the payment stream is "reversed." Instead of making monthly payments to a lender, as with a regular mortgage or home equity loan, a lender makes payments to the homeowner. While a reverse mortgage loan is outstanding, the homeowner continues to own the home and hold title to it. The money from a reverse mortgage can be used for anything: daily living expenses; home repairs and home modifications; medical bills and prescription drugs; payoff of existing debts; continuing education; travel; long-term health care; prevention of foreclosure; and other needs.

No payments are due on a reverse mortgage while it is outstanding. The loan becomes due and payable when the homeowner ceases to occupy the house as a principal residence. This can occur if the homeowner (the last remaining spouse, in cases of couples) passes away, sells the home, or permanently moves out.

The home does not have to be sold to pay off the loan. The homeowner (or heirs) can pay off the reverse mortgage and keep the home. If the home is sold and the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to the homeowner or the homeowner's estate.

One local organization that counsels seniors on reverse mortgages is the Tompkins County Office for the Aging. Through its Housing Options for Seniors Today (HOST) Program, the Office for the Aging provides a variety of services regarding housing options available to seniors.

 
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