Until recently, there were two main ways to get cash from your home. You could sell your home, but then you would have to move; or you could borrow against your home, but then you would have to make monthly loan repayments. Now reverse mortgages give you a third way of getting money from your home.

A reverse mortgage means that you don't have to leave your home if you can’t make the monthly payments, or make regular loan repayments. A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live there. It can be paid to you all at once, as a regular monthly advance, or at times and in amounts that you choose. You pay the money back plus interest when you die, sell your home, or permanently move out of your home.

Reverse mortgage loans typically require no repayment for as long as you live in your home. But they must be paid in full, including all interest and other charges, when the last living borrower dies, sells the home, or permanently moves away. They also can have high upfront costs, making them very costly if you sell and move just a few years after taking one out.

Because you make no monthly payments, the amount you owe grows larger over time. As your debt grows larger, the amount of cash you would have left after selling and paying off the loan (your "equity") generally grows smaller. But you generally cannot owe more than your home's value at the time the loan is repaid. Reverse mortgage borrowers continue to own their homes, so you are still responsible for property taxes, insurance, and repairs. If you fail to carry out these responsibilities, your loan could become due and payable in full.

Before you decide to take out a reverse mortgage, there are several questions you need to ask yourself. For a list of the questions, and for more detailed information, go to www.aarp.org/revmort. 

                                                      Scam Alert:
AARP has issued a warning about a potential scam involving Reverse Mortgage applications.

Seniors across the nation are receiving a little green post card from a company called “National Data Research”. With its bold headline, “New Government Program for Seniors Over 62,” the unsolicited mailing offers some welcome promises in these tough economic times: the chance to pay off existing mortgages and credit card debt, make home repairs and renovations, even the ability to “enhance your lifestyle.” What is not disclosed anywhere on the post card is its real purpose: to collect your contact information so it can be sold to vendors of reverse mortgages. And from there, it could be sold to other salesmen, resulting in unwanted mail and telephone solicitations.

Although there is nothing illegal about selling reverse mortgages, this recent mailing is another example of correspondence that masquerades as official government offerings when it’s actually coming from a company who is intent on making money from your private information.