Moving Forward With Reverse Mortgages

If you'd like to figure out how much money you can receive on a reverse mortgage, go to ReverseMortgage.org and use its handy online calculator. This Web site, run by the National Reverse Mortgage Lenders Association, also will allow you to search for a lender in your area.

To qualify for a reverse mortgage, your original mortgage must be paid off, or have only a small remaining balance that will be paid off as part of the reverse-mortgage process. You sign up with a participating lender, such as a bank or mortgage company. The lender will process the paperwork and give you a choice of ways to receive the money: monthly check, lump sum or line of credit.

There are monthly adjustable-interest costs and significant fees that apply to a reverse mortgage. However, these are rolled into the balance of your loan, so while you should be aware of the costs, they shouldn't be a deterrent to considering a reverse mortgage.

Then there's the big question: What happens if you die, move into a nursing home or sell your house? That's when the reverse mortgage must be repaid. When you sell the home, you repay the reverse mortgage out of the proceeds. (Remember, the home is likely to have increased in value over the years since you took out the reverse mortgage.)

If you move out of your home for longer than one year, then the home can be sold -- unless your spouse and co-owner is still living there. But if you just go to Florida for the winter, spend time in a hospital or have a short stay in a nursing home, you don't have to worry about your house being sold out from under you.

If you die and leave the home to your children, they can take out a new mortgage and repay the reverse mortgage loan. Or they can sell the home and keep the balance after the reverse-mortgage loan is paid off.