Magazine article Work & Family Life

Over 62, 'House Rich' and 'Cash Poor'?

Magazine article Work & Family Life

Over 62, 'House Rich' and 'Cash Poor'?

Article excerpt

Many older Americans are short on cash and living in a house whose value has dramatically appreciated. But they don't want to sell their home and move to cheaper accommodations.

The reverse mortgage allows homeowners over 62 to tap the equity in their homes while they're still living in them-and the Home Equity Conversion Mortgage (HECM) version of this type of loan is federally insured.

A reverse mortgage can be paid to a homeowner all at once, in monthly installments, or at times and in amounts prearranged and based on the person's age and home equity. Only when the homeowner dies or moves out does the lender have to be repaid, typically through the sale of the house.

Devil is in the details

The amount of money a homeowner qualifies for is based on the home's location and value, current interest rates, the person's age and the amount of equity built up in the home. The more equity you have and the older you are, the more money you can get. For example, a 62-year-old borrower who owns a $250,000 home might quality for $132,700 from a reverse mortgage. A 72-year-old in the same home would get about $154,500, an 82-year-old about $178,600. …

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