Reverse mortgage offers seniors over age 62 that need more financial freedom the possibility to access certain founds in different forms, either a one-time larger sum, a monthly income or a credit line. A combination of these methods is also possible. Basically a reverse mortgage is a loan where the money is paid back when the last mortgage holder dies. There are other cases where the loan becomes due, like when the lender leaves the house unoccupied for more than 1 year.

Reverse mortgages can have either fixed or variable rates, although practically most reverse mortgage rates are variable, linked to the variable US Treasury rate. With variable rates a lower rate is calculated at the beginning, after that the rates are adjusted every year, every six months or monthly. You can easily use a reverse mortgage calculator to do that. When you choose to go for a fixed rate reverse mortgage the bank will calculate a higher rate from the beginning to ensure they will have no loss in case of future rise of interest rates. This is usually the case when the borrower opts for a full draw of the funds available to them. If you think the entire process is troublesome, you may seek professional reverse mortgage counseling.

So depending on the situation, a reverse mortgage could offer either the possibility of a periodical income for the cash-strapped senior or access to larger sum of money needed for some unexpected reason.

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