Applying for a reverse mortgage, also known a home equity conversion mortgage, could be a smart choice if you are retired and need a little extra income to help pay your medical bills and other expenses. A reverse mortgage is a safe option for individuals over the age of 62 who need a little extra cash each month.


A reverse mortgage loan is offered to individuals who are over the age of 62 and who are also homeowners. With a reverse mortgage loan, you can begin to receive monthly payments fast and with little to no risk. You are probably wondering exactly what a reverse mortgage is and how it can help you.

Just as the name implies, a reverse mortgage is like having a mortgage paying you instead of you paying a mortgage. It works based solely on the current equity in your home and your age. There are no income requirements to meet with a reverse mortgage. All of the money that you receive is tax free and will not affect your Medicare or Medicaid.

In order to qualify for a reverse mortgage you must first meet the age requirement of 62. Once you have met the age requirements, you will have to apply to see how much you will be able to receive. This is calculated by taking several factors into consideration.

Getting a reverse mortgage can be a smart choice if your home is paid off or nearly paid off. If you still owe a lot of money on your home and your home value has tanked (as many have in the state of Florida) then you may qualify for a reverse mortgage, however, you will likely receive a small amount of money each month.

With a reverse mortgage you get to stay in your home and never have to pay a mortgage payment as long as you live in your home. If you were to move or pass away the loan amount would become due and your heirs will have the option to pay off the loan and capture any remaining equity as cash.

Bankers will usually give you 40%- 70% of the value of your home in either one lump sum or a monthly payment for the rest of your life. They are able to do this because they calculate the amount that you received based on your age. The younger that you are and the less of an equity position that you have in your home, the less that you will receive each month because lenders understand that you will probably be around for many more years to come.

What do you plan to do with your tax return this year? Healthy Financial Habits wants to know. We have created a poll located at the bottom right of this page. Here you are able to vote to let us know how you are going to spend your money and also view the poll results.

Author: Carla Kessler