Reverse mortgages are the opposite of the mortgage that you obtained when you acquired your home. When you acquired your home, you got what was considered a “forward mortgage”. Let’s first of all understand the basic difference between a forward mortgage and a reverse mortgage.

In a forward mortgage, the lender takes into consideration your ability to pay the monthly mortgage payments against the annual contract on the payments of the property. In a reverse mortgage there are several considerations that are taken into.

•    That the reverse mortgage is not in excess of the current market value.
•    That the person applying for the reverse mortgage is over 62 years of age.
•    The reverse mortgage can be applied to any person over 62 who owns property. The reverse mortgage can be used for any purpose.

The reverse mortgage can be paid out as:
•    One single lump sum of money, all at once.
•    Monthly payments as in a cash advance.
•    A “credit line” to be drawn on as needed.
•    Any combination of the above.

There are no income checks for a reverse mortgage. The reverse mortgage remains in effect until the person or persons taking out the reverse mortgage are deceased or leave the property as their permanent address. What the person who takes out a reverse mortgage counts on is that the value of the property increases in proportion to the debt owed on the property.

There are no “monthly mortgage payments” on a reverse mortgage. The payment of the reverse mortgage is due upon death or vacating of the property that the reverse mortgage was placed on.

Reverse mortgages are a tool that persons 62 and above who own their own property can utilize. Once a reverse mortgage is applied, there are no payments and the money that is realized from the reverse mortgage can be utilized in any manner the recipient chooses to. The amount of the reverse mortgage (plus interest) is due only upon the death of the person(s) taking out the mortgage or when the person(s) taking out the mortgage leave the property being mortgaged. Real estate is the best investment in the long term. Reverse mortgages allow those who have equity in their home to realize it in an economical way.

Upon the person or persons, who take out the reverse mortgage, death or vacating the property the reverse mortgage comes due. In recent overall real estate history, property value has increased more than the value of the reverse mortgage. People who take out reverse mortgages “bet” that their property will increase in value over and above the amount of the reverse mortgage.

Real estate has typically over time been the safest investment. There’s only so much real estate. It has to increase in value. Over the long term this is true. There may be market fluctuations however; the axiom is that “if there is a limited resource, it will increase in value”. Real Estate is a limited resource and will over the long-term increase in value.

The estate of the person taking out the reverse mortgage is responsible for the amount of the mortgage. If the person taking out the mortgage was prudent, the amount of the mortgage is covered by the sale of the property.

Reverse mortgages allow a “senior citizen” a safe way to realize the equity in their investment in real estate. Reverse mortgages provide the “senior citizen” an access to real money to provide for medical bills or unexpected expenses. A more detailed explanation of reverse mortgages is available at many websites.

When it comes to a reverse morgage, the biggest misconception is that there is only one type available. However this is far from the truth as there are actually three types of which the standard FHA reverse morgage is the most popular choice comprising of about 90%.

Basically what you have are the FHA, the Home Keeper as well as the Jumbo. The concept of the reverse morgage while it may seem to be the same as a straight mortgage there are many things that differentiate it; other then the fact that it is done in reverse. Basically with the reverse morgage, the lender pays you as the homeowner for the house until you are no longer living there and once this occurs they will take possession of the home irregardless as to whether the amount has been paid in full or not.

The FHA reverse morgage is the only one of the three that are federally insured which is the biggest reasons why so many choose it even though it may not exactly be the best option for you. However, the bonuses associated with the federally insured FHA reverse morgage is that even if you live past the date of full loan payment, you will still receive the monthly payments based on the initial mortgage.

While there are many limitations to the reverse morgage loan, there are many more beneficial reasons to choose it especially if you plan on outliving the term of the loan.