Further confusing the issue are a number of unscrupulous lenders and telemarketers who sell information about reverse mortgages to elderly people for outrageous fees, from hundreds to even thousands of dollars. To help consumers, government rules require people considering reverse mortgages to receive free counseling sessions conducted by government approved lenders, retiree associations and financial counselors. While there are many types of reverse mortgages, all have certain similarities. A homeowner can choose a monthly annuity payment, or opt for a lump sum payment, or a line of credit account from which they can draw money when they need it, or a combination of the three. They are offered by private companies, such as Transamerica Corporation and Amerifirst Mortgage.
Reverse mortgages carry several conditions.
The homeowner must live in the residence for the duration of the loan. The amount borrowed must be no more than the appraised value of the home or the maximum value allowed by HUD in a given locality, whichever is lower. The older a homeowner, the more money they can receive with a reverse mortgage. At current interest rates, a 62 year old can expect to receive about 30 percent of the value of the home, while a 95 year old may receive 80 percent. AARP outlined several other important characteristics of reverse mortgages.