Today’s economy, to say the least, is uncertain. For those living on a fixed income, it seems that every day essential items are bruising the pocketbook. It can be difficult to handle paying for the daily necessities and making ends meet. Luckily as a senior (62 or older), you have an option that can help you gain some financial independence; that option is a reverse mortgage.

A reverse mortgage gives senior homeowners the access to the equity they have built up in their home. It is a “non-recourse” loan which means that the original borrower(s) will never owe more than the home is worth, regardless of the loan balance. The only amount that will be owed is the original loan amount plus accrued interest. You will never be asked to pay back the loan until you leave your home or no longer occupy the residence.

For example, a senior couple, John and Mary, qualify for a reverse mortgage. They use the funds to go on a once-in-a-lifetime trip to Hawaii and help their grandkids pay for their college education. John and Mary were also able to make some home improvements and use the funds for daily needs and monthly bills. They made sure to pay their property taxes and property insurance and maintain their home, which is required with a reverse mortgage. They resided in their home until moving to an assisted living center. Their children then sold the home, the reverse mortgage was paid with the sale of their home and the rest of the equity went to their family.

The senior couple was able to enjoy their retirement the way they really wanted to, without having to worry about whether or not they had enough funds to last through their retirement. Plus, with the reverse mortgage they knew that they would not owe more than their home was worth; which eliminated the need to worry about leaving a mortgage to their children.

Even if you have a reverse mortgage and your home is valued less than your reverse mortgage amount. Your home will always pay for itself. Since the loan is insured by the Federal Housing Administration (FHA), they will reimburse the lender from an insurance pool if, your home is not worth more than your current reverse mortgage. As this is a loan, the homeowner’s mortgage note will serve as a legally binding contract for the terms of the loan – therefore your loan can never be cancelled or changed without the homeowner’s actions.

So for example, if you choose to obtain a reverse mortgage and your home appraises at $250,000, your new loan amount on the reverse mortgage will be $200,000. Years down the road you decide to sell your home and move in with your kids to be closer to your grandchildren. Your home gets reappraised at that time for $175,000. You then put your home on the market for the $175,000, the FHA takes care of the difference, which is $25,000. Since the home is no longer in your family, you are not responsible for the difference. It is that simple.

If you are looking for a little extra cash this could be the mortgage for you. You will have the means to do things you may have been putting off; like a dream vacation, or helping your grandchildren pay for college. You can have the additional funds to do anything you want. You can take away the worry of trying to make ends meet and start living your retirement the way you have always dreamed.

No matter what you choose to do with the funds from your reverse mortgage or what type of payment plan you select you will never owe more than your home is worth. It is that simple with no worry to you or your family. The reverse mortgage is tax-free* and you can choose to take the money in a lump sum or receive monthly payments.

You’re not alone with looking into a reverse mortgage. According to MetLife, in 2009 the total number of seniors with a reverse mortgage in the U.S. was 241,345. That is 7 times more the number of seniors with a reverse mortgage in 2001, which were only 31,822. Join the thousands who already have taken control of their retirement with a reverse mortgage.


*Please consult with your financial advisor.