It is often the case, that the largest potential source of retirement funding for the individual today, is his primary residence. In times where interest rates on investments are down, where pensions have been adversely affected by stock market performance, where savings for retirement are minimal, it is the retiree’s home that can serve as the foundation for a financially secure future.

But housing sales are down, and many retirees wish to continue to live in their homes. So what is there to do? The reverse mortgage - a mortgage that pays you, can be the answer.

Make no mistake, a reverse mortgage is a loan—a loan against the equity in your home. But it is a loan that you do not have to repay in your lifetime. So long as you occupy your residence, so long as you are alive, you don’t make principal or interest payments on a reverse mortgage. You do, however, make tax and insurance payments on your residence.

Both government backed and private lenders make reverse mortgages available. You will need to shop around for your best deal, and there are sources to help you. The Department of Housing and Urban Development, and the AARP have a wealth of information available, describing the reverse mortgage process. Contact them.

So, how do you get the money out?
There are a variety of ways to get your cash out of your home with a reverse mortgage. You may take it all at once in a lump sum, you may receive regular monthly payments, (perhaps a better way to go), you can use the reverse mortgage as a credit line against your home, withdrawing money as needed, or you can combine a variety of these methods, depending upon your needs.

To be eligible for a reverse mortgage, you must be sixty two years or older, and own and occupy your home—and that home can be a townhouse, a detached home, a two to four unit property that you occupy, or even some manufactured homes.

Since the reverse mortgage is equity based, that is, based upon the value of your home, you don’t have to meet income requirements normally associated with a traditional mortgage. Remember, during your lifetime in the home, you are not making mortgage payments. Another benefit of the reverse mortgage strategy for retirees, is that the money you take out of the home is not taxable as income. It is after all, still a loan.

Normally, monies taken out in a reverse mortgage will not affect Social Security or Medicare benefits—an important consideration for those on a fixed income.

Be aware, that there are costs associated with the reverse mortgage. A lender charges an origination fee to place the loan, there are appraisal costs, potential servicing fees by the lender, and possibly legal costs involved.

Realize also, that the more money you use from the reverse mortgage, the less equity is left in your property, and that when you die, your estate will only receive the difference between the equity on the property minus the outstanding reverse mortgage. The loan must be paid off at your death, or if you reside in a nursing home or other medical facility for more than twelve months.

Reverse mortgages may not be for everyone, but for some, it can be the difference between a monthly struggle to make ends meet, and a comfortable retirement.

Is there an issue that you would like W. ADAM MANDELBAUM ESQ. to address?  If so, contact him: 516 624-0240 email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it or on the web at http://justiceneversleeps.net and tell him what you're thinking.