Reverse mortgages are used to assist seniors who want to supplement their income with mortgage payments, but instead of paying the bank, those who take out the loan actually get paid. I spoke with someone the other day who had a completely mistaken concept of what these are used for and had the mistaken idea that these were simply a tool that ended up scamming seniors out of their retirement.

I heard it explained this way: Reverse mortgages are no free lunch which is true, but we also would consider that these mortgages are a great tool for many seniors who simply need or want some extra funds to supplement their retirement, improve their standard of living, do some traveling or any number of other things.

There are a lot of misconceptions about what reverse mortgages are and what they can be used for as well as how they work. Before I get into all of that, you need to know that these types of mortgages are a completely legitimate financial tool. You may start to see more and more news stories about these types of mortgages.

One of the protective features that are built into the reverse mortgages is the requirement that each applicant receive counseling from a 3rd party counselor that isnt related to the lender in any way. These counselors must work with the borrowers and provide documentation back to the lender prior to being able to approve the loan.

This process insures that the seniors receive the type of advice they need prior to making a decision like this. So, here are some of the details of this relatively new type of mortgage. These work based on seniors who will be moving out of their home at some point in time and the fact that these homes have equity. The bank or lender is relying on the ability to recoup funds from the refinance of the home or the sale of the home when the loan comes due.

The loan will come due when the borrower moves out of the home permanently or if the borrower dies. The main requirements of the homeowner are that they maintain the home, pay the property taxes and the homeowners insurance. To qualify, the minimum age is 62. Typically, the older you are, the more youll qualify for because there is the assumption that you wont be in the home for as long.

There is a lot of information online about reverse mortgages. Do your research and make sure you ask as many questions as you may need to get the answers as to whether or not reverse mortgages are right for you.