If you are at least 62 years of age and need an extra source of income, then a reverse mortgage is something that is worth consideration. Many people have heard of the term before but have no clue as to what a reverse mortgage is. It is basically a type of loan for seniors in which their home's equity is used by the lender as collateral. In layman's terms, your home equity is converted into cash, which comes in the form of monthly payments, a lump sum or line of credit.

Reverse mortgage can be an excellent source of income for seniors who are out of work and need an extra source of cash flow in order to live comfortably in retirement or to pay off additional bills. However, just like taking out any other type of loan, you have to absolutely be aware of what you are getting yourself into and read the fine print outlined in the terms and conditions. It helps to consult with a reverse mortgage Texas lender to learn what the loan entails.

It also helps to learn what the reverse mortgage pros & cons are. Like with any other loan offer, there is a catch. The good thing about it is that it doesn't have to be repaid as long as you continue to live in the home. Repayment only begins when you move out or upon your death. You should consult with a reverse mortgage Austin agent to learn what the specific repayment terms are.

There are also pitfalls that you have to watch out for. The obvious thing to be careful of is the fee, which can take the form of interest rates, title insurance fee, appraisal fee and loan origination fee. None of it is paid out of your pocket; rather, it is rolled into the loan. The other major downside is that it affects the value of your estate. The reverse mortgage almost always decreases the equity of your property. While this may not affect you directly, it does mean a lesser inheritance for your heirs. Depending on your specific situation, the cons may outweigh the reverse mortgage pros.

You should use a reverse mortgage calculator to figure out the loan amount you are eligible for. Most sites have a calculator that you can use for free. All you have to do is input some basic information, such as your zip code, date of birth and value of your home. You may also be asked to enter additional information, which may include your mortgage and liens. The figure you get from reverse mortgage calculators is just an estimate; to determine the exact amount, you have to speak with a reverse mortgage Utah lending institution.

Depending on where you live, you can speak with a HECM loan Utah or HECM loan Texas agent to learn more. The Home Equity Conversion Mortgage is the loan program backed by the Department of Housing and Urban Development.

It is important to clear up a few myths about what a reverse mortgage is and isn't. First of all, it is a loan and NOT free money. Since it doesn't have to be repaid immediately, too many seniors get the impression that the money is a handout from the government. Also, a reverse mortgage is only a lien against your home, and you still retain full ownership of your property. A reverse mortgage can be of great benefit to the borrower but only if the terms and conditions are fully understood. Always speak with a reverse mortgage Houston agent before filling out any paperwork.

Author's Bio: 

A reverse mortgage Utah lender can give you more information about the terms and conditions of your loan. It also helps to understand the reverse mortgage pros & cons before signing up.