Perhaps you're in a quandary about how to help your elderly mother pay for costly prescription drugs or for an aide to assist her with bathing and household chores. If she's at least 62 and owns her home outright or has a small mortgage, consider a reverse mortgage. Reverse Mortgage Basics Reverse mortgages allow homeowners to convert part of the equity in their home into income without having to sell, give up the title or take on monthly mortgage payments. They are available in every state. Homeowners can elect to receive the loan proceeds in a lump sum, as monthly income, a line of credit or a combination of these.
Most borrowers choose a line of credit.
The amount owed can never exceed the value of the home. Don't assume the loan with the biggest line of credit is the better deal. A key benefit of the HECM loan is that its line of credit continues to grow after the loan is closed at the same rate as the rate being charged on the loan balance. Before You Bite, Take Everything Into Consideration A reverse mortgage is generally an adjustable-rate loan that carries a heavy front load of costs, so it's usually not a good deal if the borrower isn't going to stay put for a long time. This rate includes all loan charges, such as interest, closing costs, insurance and service fees.