A question that we hear time and time again is "What is a Reverse Mortgage"? Here is exactly what a reverse mortgage is and isn't.
A reverse mortgage is a FHA insured program available for homeowners who are 62 or older. It allows seniors to take part of their home's value in tax-free cash, without being required to make a monthly mortgage payment(although property charges like taxes, homeowner's insurance etc must be paid). The senior stays on the home's title(or deed), and the reverse mortgage only becomes due when the senior permanently vacates the house(dies, sells the home, or goes to a full time nursing home).
Any and all liens that are owed on title will be paid through the reverse mortgage. Then, if extra money is available seniors can access their money in two lump sums of cash(one up front and the next available after a year), monthly income for life(or a set amount of time), or a line of credit with a growth rate(more information on the line of credit here).
Reverse mortgages shouldn't be "one size fits all". Every senior has a unique situation, and thus needs a well thought out solution. Before we recommend that a senior take a reverse mortgage, or how to access their cash, we learn about their goals and financial situation. That way we are all confident that the reverse mortgage program offered can help the senior in the strongest possible way.