FHA Reverse Mortgage - How It Works

There may be times whenever we need to do something a little bit desperate in order to help us to get by. This is especially the case if we find ourselves in a situation where we are unable to afford our bills and all we have to live on is our Social Security check. In the United States, there is an option for getting an FHA reverse mortgage on our home that can help us to get by in our golden years. Here is how they work.

When you get a regular mortgage, you borrow money according to the value of the home and then you pay the bank back on a monthly basis, including principal of the loan and a lot of interest. You also tend to pay a little bit of mortgage insurance, depending on the type of loan to have and you may have the taxes and insurance escrowed into the loan.

An FHA reverse mortgage is a little bit different than this. You will still be borrowing money on the value of the home but instead of making payments to the bank, they are going to make payments to you. The interest and fees for this type of loan are going to be added on to the note and will be payable at the time that you move out of the home or when is away.

Depending on your age, you're going to able to get a different amount of money on your FHA reverse mortgage. Starting at the age of 62, you will be able to get somewhere around 25% of the value of your home in a reverse mortgage. This number will go up according to the age that you are and by the time you are 85 years old, you will be able to get well over 50% of the value of the home.

There are a lot of regulations that govern this type of loan and there are also some reverse mortgage fees that you need to be concerned about. Things such as interest and loan fees will be added on to the regular closing costs and will be due while you are sitting at the closing table. You may be able to defer these to a certain extent with the money that you are getting from the reverse mortgage but make sure that you prequalify this with the FHA reverse mortgage company ahead of time.