Q: I live on Social Security income only, in a house that is paid for. Even without having to make house payments, I have a really hard time making ends meet. I really need to hire someone to come in and help me with chores once a week. I can't do the yard work, but I can't afford to hire it done. My kids do the best they can to fill in these areas of need, but they're busy. I've heard that I can borrow money against my house and use it to make ends meet. What is that program called?
A: For many older adults, their single largest asset is their home. A reverse mortgage is a special type of home loan that lets a homeowner convert the equity in his or her home to cash without selling the property or giving up the title. The loan provides funds to the senior as a one-time lump sum payment, a line of credit, or a fixed monthly payment for life (or a shorter period chosen by the borrower). The loan amount is based on the owner's equity in his or her own house, the value and location of the property, current interest rates, and the owner's age at the time of application.
There are no credit or income requirements to qualify for a reverse mortgage. Instead, the borrower must be at least 62 years old, and must receive counseling or consumer education in advance. The maximum loan amount is larger if the home is debt-free or nearly so, but this isn't required to obtain a reverse mortgage.
Unlike a traditional mortgage or home loan, repayment is not required until the homeowner no longer uses the home as their primary residence. The owner must keep current on taxes and insurance. The loan is due at death (from the estate) or if the owner moves to another location.
For more information:
Fannie Mae, (800) 732-6643.
Consumers can obtain information on Home Equity Conversion Mortgage (HECM) and the Fannie Mae Home Keeper reverse mortgage and a list of lenders around the U.S. offering these two government-insured reverse mortgages.
National Reverse Mortgage Lenders Assn., (202) 939-1765.
Consumers can find names of reverse mortgage lenders in their state by calling NRMLA or checking the "lender's list" on the association's Web site. This site also has detailed information on reverse mortgages.
If you have a question or comment for "Sense for Seniors," write to Betty Gibb, Kansas Senior Press Service, 11875 S. Sunset, Suite 200, Olathe 66061.