Is a Reverse Mortgage Right for You?

Reverse mortgages may be a good financial choice for homeowners who:

• Could use an additional lump sum or regular cash payments to meet expenses
• Don't want the burden or hassle of monthly mortgage payments
• Might have trouble qualifying for a cash-out refinance due to income or credit criteria

A reverse mortgage is a type of home equity financing that allows you to exchange home equity for cash. This type of home loan allows you to use your equity to supplement living expenses, all while staying in your home and making no monthly mortgage payments. Programs are government-regulated, and most are sponsored by the Federal Housing Administration (FHA).

Most reverse mortgage lenders require that borrowers be at least 62 years old and have significant equity in their homes.

Reverse mortgages are not right for everyone, but many prospective borrowers can benefit by understanding this financing option. In a 2006 AARP survey, 94 percent of reverse mortgage borrowers reported that their reverse mortgage had given them peace of mind, and 83 percent said their reverse mortgage "mostly" or "completely" met their financial needs. Mortgage expert and academic Jack Guttentag has called reverse mortgages "one of the best-engineered financial tools of our generation" and estimates that millions of homeowners "could significantly improve their lives" by taking out a reverse mortgage.

Still not sure if a reverse mortgage is right for you? There's no obligation to learn more from a loan specialist who can walk you through the comparison of a reverse mortgage and a cash-out refinance loan.