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What is a reverse mortgage?

With so much talk and advertisements about reverse mortgage products today, the #1 question on most people's minds is "What is a reverse mortgage?" To answer that question and other related questions, American Consumer Credit Counseling (ACCC) offers this short primer on reverse mortgage solutions.

What is a reverse mortgage?

A reverse mortgage is a loan that lets homeowners 62 years of age or older convert part of their home equity into available cash. Homeowners can use a reverse mortgage to help pay for basic living expenses, for healthcare costs, for repairs to the home or for any other expenses they incur.

How do reverse mortgages work?

With a regular mortgage, a borrower takes a loan to pay for a house and makes regular monthly mortgage payments in order to pay back the lender. With a reverse mortgage, the borrower takes a loan against the equity they have already built up in their property, and the lender makes monthly payments to the homeowner.

What is a reverse mortgage intended to do?

Reverse mortgages were created to provide seniors with more financial independence and the ability to live longer in their home.

What is a reverse mortgage helpful for?

A reverse mortgage is commonly used for things such as:

  • Supplementing daily living expenses.
  • Paying for home care costs.
  • Covering the cost of home repairs and structural adaptations.
  • Helping with emergency costs.

What is a reverse mortgage counseling provider?

One of the most common types of reverse mortgages is a Home Equity Conversion Mortgage (HECM), a reverse mortgage that is insured by the U.S. Department of Housing and Urban Development. In order to qualify for this federally insured mortgage, borrowers must receive financial counseling from an approved provider such as ACCC. In the counseling session, borrowers receive reverse mortgage information and a counseling certificate.

What is a reverse mortgage counseling certificate?

A reverse mortgage counseling certificate proves that borrowers have completed a financial counseling session with an approved provider. The certificate is a requirement when applying for an HECM reverse mortgage.

What is a reverse mortgage scam?

Reverse mortgage scams are a form of fraud carried out by unscrupulous individuals and are designed to steal the equity from the property of an unsuspecting homeowner. To avoid being the victim of a reverse mortgage scam, do not respond to unsolicited advertisements, and seek out a reverse mortgage counselor before signing any documents or receiving any payments from a home that you did not purchase.

Where can a homeowner find reverse mortgage info?

The certified housing counselors at ACCC can provide homeowners with a wealth of information about reverse mortgages as well as the counseling session required to apply for an HECM mortgage.

American Consumer Credit Counseling (ACCC) offers non-profit credit counseling and debt relief programs for consumers nationwide who find themselves drowning in debt and wondering "How do I get out of debt?" Our certified credit counselors have helped thousands of individuals and families learn how to reduce credit card debt and get out of debt through a variety of credit reduction strategies. Our credit card debt consolidation and debt management plans help achieve credit card relief by consolidating credit cards payments to pay credit card debt down more quickly. We also offer bankruptcy counseling, housing counseling and other financial education services.

Better Business Bureau Mass Housing Approved National Industry Standards for Homeownership Education and Counseling Council on Accreditation NFCC Member