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What is reverse mortgage

What is reverse mortgage lending?

Reverse mortgage products have become increasingly popular with older homeowners. Because it can be difficult to get clear and unbiased information about reverse mortgage solutions, American Consumer Credit Counseling (ACCC) offers this brief list of FAQs about reverse mortgage products.

What is reverse mortgage lending?

A reverse mortgage loan is in many ways the opposite of a standard mortgage. When buying a home, a homeowner borrows money to purchase a property and makes monthly payments to the lender over time, building up equity in the home. With a reverse mortgage, the homeowner receives monthly payments from a lender, using the equity in their home as security against the loan. When a homeowner sells the property or passes away, the equity in the home is used to pay back the lender.

How do reverse mortgages work?

Reverse mortgages are available only to homeowners 62 years of age or older. These loans were created to help seniors manage finances in their later years more easily, and to allow them to benefit from the years of hard work in paying off their mortgage and building up equity in their home.

What is reverse mortgage lending used for?

The funds from a reverse mortgage can be used to pay for anything the homeowner chooses, but are commonly used for:

  • Helping to pay for daily living costs.
  • Paying off higher debts to improve cash flow.
  • Covering the costs of medical expenses and home healthcare.
  • Making home improvements or repairs, or adapting the home to allow a senior homeowner to remain there longer.
  • Paying for emergencies.

What is reverse mortgage counseling?

In order to qualify for a Home Equity Conversion Mortgage, a type of reverse mortgage that is insured by the US Department of Housing and Urban Development, borrowers must complete a financial counseling session with an approved counseling provider. During the counseling session, borrowers receive comprehensive reverse mortgage information. The counseling session helps to ensure that borrowers understand the requirements of their reverse mortgage product.

What is reverse mortgage assistance from ACCC?

As a nonprofit organization dedicated to providing education, counseling and resources around financial matters, ACCC's certified housing counselors can provide a wealth of reverse mortgage info as well as federally approved counseling for reverse mortgages.

What is reverse mortgage versus a home equity loan?

With a home equity loan, borrowers must have sufficient income to qualify for the loan and must make monthly mortgage payments. A reverse mortgage has no income requirements and borrowers do not need to make any monthly mortgage payments.

What is reverse mortgage fraud?

Seniors are frequently the victims of fraudulent schemes operating under the guise of a reverse mortgage loan. To avoid becoming the victim of reverse mortgage fraud, do not respond to unsolicited advertisements, except payments for a home you did not purchase, or sign any documents without consulting a financial professional.

Learn more about what is reverse mortgage counseling at ACCC and other housing products including ACCC's homebuyer education course.

For individuals and families trying to figure out how to pay off debts, American Consumer Credit Counseling (ACCC) provides non-profit credit counseling, credit card reduction and consumer debt management services for consumers nationwide. Our certified credit counselors provide financial education for anyone wanting to learn how to get out of debt and how to eliminate credit card debt. As alternative to expensive debt restructuring services and credit card debt consolidation loans, our debt management plans are a kind of credit card relief program that have helped thousands of people pay down credit card debt by consolidating payments and reducing interest rates and finances charges. We also offer bankruptcy counseling, housing counseling and other financial education services for help getting out of debt.

American Consumer Credit Counseling - Consolidate Debts - Better Business Bureau American Consumer Credit Counseling - Consolidate Debts - Mass Housing Approved National Industry Standards for Homeownership Education and Counseling American Consumer Credit Counseling - Consolidate Debts  - Council on Accreditation American Consumer Credit Counseling - Consolidate Debts  - NFCC Member