In case you are not familiar with what a reverse mortgage



is, here is a short definition: A reverse mortgage is a

unique type of loan or financial planning tool that allows

senior homeowners that are 62 years or older to access the

equity that they have built up in their homes. A reverse

mortgage is unlike any other type of mortgage, because a

reverse mortgage requires no monthly payments to be paid to

the lender. It also does not require the senior homeowner to

qualify for the loan based on credit or income.

The equity that is paid to the homeowner can be taken as a

lump sum, a set monthly amount or a combination of the two.

The money is non-taxable and does not adversely affect the

senior's social security or medicare benefits. The amount of

money that a senior can qualify for is determined by the age

of the youngest owner on title, the value of the property

and it's location, the interest rate at the time of

application, and the amount of equity the senior has built

up in the property.

Now, back to the energizer bunny analogy.

The reason that I say that a reverse mortgage keeps

giving and giving and giving is because if you were to opt

for the monthly "tenure" payments to be made to you, you are

guaranteed by the Federal Government, that you will continue

to receive that same monthly amount every month for as long

as you live in your home. That's right! You collect until

you die or permanently leave your home. Even if you were to

live to be 112 and you all ready received far more income

from the reverse mortgage than your home is worth, you still

get that money every month no matter what, as long as you

remain in your home. You, your estate and your heirs are NOT

obligated to pay back the reverse mortgage lender any more

money than your house can be sold for at the time of your

death or when you permanently move out of your home. So, if

you outlive your life expectancy and end up receiving more

money than the value of your home, the U.S. Department of

Housing and Urban Development (HUD) will pay the lender for

any shortfall on a HECM (FHA) reverse mortgage.

Additionally, there are similar protections in place for

non-FHA reverse mortgages as well.

One of the biggest criticisms you will hear when you first

look into the pros and cons of getting a reverse mortgage is

that the closing costs are expensive. Well at face value,

that seems like a true statement. If you compare the

closing costs of a reverse mortgage to the closing costs of

a traditional forward mortgage, you will find that a reverse

mortgage can cost more than twice as much in fees than a

forward mortgage. But lets take a moment and analyze why

this is the case. Remember that GREAT benefit that we

started out talking about; the perpetual monthly income that

is guaranteed for as long as you remain in your home? The

reason that the government can stand behind such a huge

guarantee like that, is because they have essentially

required every reverse mortgage borrower to contribute to

the insurance fund that will payoff the lenders in case of a

shortfall. So instead of your estate or your heirs having to

make up the shortfall, the insurance fund is tapped to make

the lender whole. If this insurance fund was not there, you

can bet there would be few, if any, lenders making reverse

mortgages with the safeguards that are in place today. Each

FHA reverse mortgage that is initiated today carries a 2%

fee for this insurance fund which is a part of the overall

closing costs associated with a reverse mortgage. So, yes

the costs are higher for a reverse mortgage, but they are

justified in order to make the reverse mortgage the valuable

financial planning tool that it is for many seniors today.

Many seniors would be strapped for money if they did not

have the ability to tap into one of their biggest assets,

their home equity.

Reverse mortgages are becoming more and more popular by the

day, as more seniors are becoming educated about how they

really work. There have been a lot of myths perpetuated over

the years about reverse mortgages as well as a lot of

improvements made to the reverse mortgage products that are

currently offered. The number of federally insured reverse

mortgages made in the United States increased by 77% in the

fiscal year 2006 compared to 2005. More reverse mortgage

products are being developed and will be introduced to the

market place in upcoming months.

For more in depth information regarding reverse mortgages,

locating a lender in your area and finding out how much

money you can qualify for, please visit

http://www.letyourhomepayyou.com