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A reverse mortgage is a way for senior citizen homeowners to borrow money against the equity in their home without selling the home. Unlike a regular mortgage, the reverse mortgage requires no payment of principal or interest until the borrower dies, no longer owns the home, or does not occupy it as a principle residence for at least 12 months. At that point, the reverse mortgage matures, and must be repaid. In the United States, the home must be owned free and clear or have only a small mortgage balance to be eligible for a reverse mortgage. Everyone on the title must be age 62 or older to obtain a reverse mortgage. The reverse mortgage has no income requirements, and the money is available tax-free, as a lump sum, line of credit, or monthly payment. The FHA is the largest reverse mortgage originator, and Fannie Mae is the best-known private reverse mortgage originator. Detailed information and a loan calculator can be found on the website of the National Reverse Mortgage Lenders Association. |
