Money in Your Home (Equity)
Some people have more money tied up in equity in their homes than they have in savings. If this is true for you and you are at least 62 years old, you might consider a "reverse mortgage" loan, a specialized program offered under guidelines of the U.S. Department of Housing and Urban Development (HUD). The amount of the loan will be less than the full value of the home. You can take the money in a lump sum, as fixed monthly payments, as a line of credit, or some combination of these methods. There is no restriction on how you can use the money. You don’t have to give up title to the house and you don't have to pay off the loan until you are no longer able to live at home, you sell the home, or you die. Be aware that these kinds of loans can have high initial costs and also may affect whether you qualify for some government programs, including Medicaid.
The most popular and generally less expensive reverse mortgages are federally insured Home Equity Conversion Mortgages (HECM). In 2006, the maximum amount you could borrow ranged from $362,790 in high-priced areas to $200,160 in rural and non-metropolitan areas. Another kind of reverse mortgage is the Fannie Mae HomeKeeper loan. The maximum loan amount in 2006 is $417,000.
For more information about reverse mortgages or to find a lender who makes these loans, contact the Reverse Mortgage Lenders Association or 866/264-4466. Many nonprofit organizations, such as AARP, offer consumer information and classes about reverse mortgages.
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