Qualifications

• Reverse mortgage homeowners must be over the age of 62 and own their homes outright; they cannot owe money on an existing mortgage. The homeowner must live primarily in the home as opposed to using it as a vacation property or temporary home while intending to live elsewhere. However, homeowners may use reverse mortgage funds to pay for a mortgage on a second home if they continue to live primarily in the home with the reverse mortgage.
  
  

Types of Reverse Mortgages

• Qualified homeowners may take out a long-term or short-term reverse mortgage. Long-term mortgages last indefinitely; the homeowner receives a check each month that he continues to live in the home. If the homeowner moves out or dies, the mortgage immediately becomes payable. Short-term reverse mortgages last for a specific period of time. A homeowner may want to get funds for a couple of months to finance a home remodel. These mortgages also do not become payable until the homeowner moves out or dies.
  
  

Considerations

• A reverse mortgage is not free money; it is a loan that your heirs will eventually have to pay back. If you take out a long-term reverse mortgage and live in your home for 20 to 30 years, your heirs may find themselves with a large debt to pay upon your death. In most cases, your heirs will not be able to keep the home; after paying off the reverse mortgage, the home must be sold. In addition, if you find yourself having to move to be closer to your family or because of illness, the reverse mortgage will immediately become payable.
  
  

Maximum Amounts

• You cannot borrow more than the value of your home when you take out a reverse mortgage. Thus, you must have your home appraised to determine its value. In addition, the Federal Housing Administration (FHA) sets lending limits based on the property values in the area in which you live. The maximum amount you can borrow also depends on the ages of the people living in your home. The older you are, the more you can borrow; but if you share your home with a younger senior citizen, the FHA uses her age to calculate lending limits.