The money from a reverse mortgage can be used for ANYTHING: daily living expenses; home repairs and home modifications; medical bills and prescription drugs; pay-off of existing debts; continuing education; travel; long-term health care; prevention of foreclosure; and other needs.

If the borrower home needs physical repairs (mandatory repairs) in order to qualify for a reverse mortgage, a portion of the proceeds will be set aside for this purpose.
To qualify for a reverse mortgage the borrower must be at least 62 and own the borrower’s own home. There are no income or medical requirements to qualify. The borrower may be eligible for a reverse mortgage even if the borrower still owes money on a first or second mortgage. In fact, many seniors get a reverse mortgage to pay off a first mortgage.

The borrower can choose how to receive the money from a reverse mortgage. The options are: all at once (lump sum); fixed monthly payments (for up to life); a line of credit; or a combination of these. The most popular option - chosen by more than 60 percent of borrowers - is the line of credit, which allows the borrower to draw on the loan proceeds at any time.

The size of the reverse mortgage that the borrower can get depends on the borrower’s age at the time the borrower apply for the loan, the type of reverse mortgage the borrower choose, the value of the borrower’s home, current interest rates, and - sometimes - where the borrower live. In general, the older the borrower is and the more valuable the borrower’s home (and the less the borrower owe on the home), the larger the reverse mortgage can be.

The costs associated with getting a reverse mortgage include the origination fee (which can be financed as part of the mortgage), an appraisal fee, and other charges similar to those for regular mortgages.

The money provided to the borrower from a reverse mortgage is tax-free, and does not affect regular Social Security or Medicare benefits. However, the funds received from a reverse mortgage may affect the borrower’s eligibility for certain kinds of government assistance, such as Medicaid or state assistance programs, so the borrower should check into this before getting a reverse mortgage.

Before applying for a reverse mortgage, the borrower must first meet with a reverse mortgage counselor. The borrower may, however, first approach a reverse mortgage lender, who can provide the borrower with the names of approved counseling agencies in the borrower’s area.

The counselor's job is to educate the borrower about reverse mortgages, to inform the borrower of other alternative options available to the borrower given the borrower’s situation, and to assist the borrower in determining which particular reverse mortgage product best fits the borrower’s needs.
In general, counseling sessions are done face-to-face, although telephone counseling is becoming more prevalent.

No payments are due on a reverse mortgage while it is outstanding. The loan becomes due and payable when the borrower ceases to occupy the home as a principal residence. This can occur if the borrower (the last remaining spouse, in cases of couples) pass away, sell the home, or permanently move out.

The home does not have to be sold to pay off the loan. The borrower (or the borrower’s heirs) can pay off the reverse mortgage and keep the home. In any event, the amount owed on the reverse mortgage can never exceed the value of the home at the time the loan must be repaid. Moreover, if the home is sold and the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to the borrower or the borrower’s estate.

Reverse mortgages are offered by banks, mortgage companies, and other financial institutions.