The actual amount is based on the equity the owner has in the house and his anticipated life expectancy. Better yet, no matter how much or how little is borrowed, the loan doesn't need to be repaid as long as the borrower maintains the place as a primary residence. Reverse mortgages aren't for everyone. They're complex and they certainly aren't cheap. But for older homeowners who need additional cash, it can mean financial independence and an adequate standard of living.
Most seniors use the money to supplement their incomes and make much needed repairs to their homes.
According to lenders, the most typical uses include paying off debt, helping out family members, travel, paying medical bills and prescription drugs, and preventing foreclosure. Nowadays, younger seniors are even using the proceeds to pay for long-term care insurance. And others are using the money to buy a new house, one that's more conducive to their lifestyle, perhaps in a better neighborhood or in a warmer climate, or perhaps closer to the children and grandchildren. Martha Clements used her home equity conversion loan to pay for some much needed repairs to her Port St. Lucie, Fla., house, a place she bought for all-cash in 1997. But to buy it, she had to use all the proceeds from the sale of a condo she bought when her husband died some years before, and cash in some other investments.