# 4 Things You Should Know Before Getting a Reverse Mortgage
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-13
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Four Key Things to Know Before Getting a Reverse Mortgage
Meta Description: Discover what reverse mortgages are, who qualifies, how much can be obtained, and the advantages of getting a reverse mortgage on your home. Learn more at
URL: https://financedigest.com/4-things-you-should-know-before-getting-a-reverse-mortgagehtml

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The concept of reverse [mortgages](https://www.financedigest.com/metro-bank-posts-flat-third-quarter-loan-growth.html) gets thrown around often, but what are they and how do they work, and how does one apply for a reverse mortgage such as offered by bloomfin.caIt has many benefits and some disadvantages, so it’s important to understand both before applying for one. Here are four things you should know before getting a reverse mortgage on your home.

**_1) What is a reverse mortgage?_**

A reverse mortgage is basically exactly what it sounds like: a [loan on your home](https://www.financedigest.com/home-equity-made-simple-things-to-know-before-applying-for-loans.html "Home Equity Made Simple – Things to Know Before Applying for Loans") that’s repaid after you die or move out. Reverse [mortgages](https://www.financedigest.com/metro-bank-posts-flat-third-quarter-loan-growth.html) have become increasingly popular as an [option for seniors](https://www.financedigest.com/funding-options-bolsters-senior-team-with-appointment-of-new-commercial-director.html "Funding Options bolsters senior team with appointment of new Commercial Director") who no longer have an income, but who still want to live in their own homes. A reverse mortgage provides a loan against the home equity to the homeowner. Typically, one doesn’t have to make payments while they [live in their home](https://www.financedigest.com/ashberry-homes-launch-river-living-homes-peters-village.html "Ashberry Homes Launch River Living Homes In Peters Village"). This [means once they move out and stop making payments](https://www.financedigest.com/what-emv-tokenization-2-0-means-for-the-payments-industry.html "What EMV Tokenization 2.0 means for the payments industry"), any remaining loan will be due in full. A reverse [mortgage basically takes money from your home and then pays](https://www.financedigest.com/7-questions-to-ask-before-paying-off-your-mortgage-early.html "7 Questions to Ask Before Paying Off Your Mortgage Early") it back over time. These payments can be useful for homeowners to even pay back the debts they have, which can be a significant load.

**_2) Who qualifies for one?_**

To qualify for a reverse [mortgage,](https://www.financedigest.com/metro-bank-posts-flat-third-quarter-loan-growth.html) you [must be 62 years](https://www.financedigest.com/2019-year-must-re-build-public-trust-finance.html "2019 is the year we must re-build public trust in finance") or older, own your home, and have enough equity in your home to generate sufficient income. That last point is key: Equity is what separates reverse [mortgages from other loans](https://www.financedigest.com/mortgage-refinancing-how-to-refinance-a-home-loan.html "Mortgage Refinancing: How to refinance a home loan"). Instead of paying [back money with interest, you’re using someone else’s money to pay back your debts](https://www.financedigest.com/european-junk-debt-sales-spring-back-to-life-as-sentiment-improves.html "European junk debt sales spring back to life as sentiment improves"). There are also income limits that restrict who can get one. If you earn more than $46,000 per year as an individual or $61,000 per year as a couple filing jointly, you don’t qualify. The limit goes up to $62,000 per year if you’re married but file separately. And if your spouse is applying for a reverse mortgage but doesn’t live in your house full-time and/or isn’t listed on title as an owner of record—for example, if he or she lives elsewhere while working—the maximum [income limit rises](https://www.financedigest.com/stanchart-surprises-with-40-profit-jump-ups-income-goal-on-rising-rates.html "StanChart surprises with 40% profit jump, ups income goal on rising rates") to $80,000 per year. Your lender will conduct an underwriting assessment based on current market conditions when determining whether you meet all eligibility requirements and have sufficient [equity in your home](https://www.financedigest.com/home-equity-release-how-to-get-the-best-valuation-and-what-factors-can-affect-it.html "Home Equity Release: How to Get the Best Valuation and What Factors Can Affect it?").

**_3) How much can I get with a reverse mortgage?_**

The amount you can get with a reverse mortgage depends on current interest [rates and how much equity](https://www.financedigest.com/rate-rise-fears-prompt-third-week-of-global-equity-funds-outflows.html "Rate rise fears prompt third week of global equity funds outflows") is in your home. These terms also [change according to marital status](https://www.financedigest.com/pelosi-praises-taiwan-says-asian-trip-wasnt-to-change-status-quo.html "Pelosi praises Taiwan, says Asian trip wasn’t to change status quo") among other things. So ultimately, the amount fluctuates from [person to person over the years as per the home](https://www.financedigest.com/to-be-a-young-person-and-own-your-own-home-should-be-a-dream-that-everyone-has-the-right-to-fulfil.html "“To be a young person and own your own home should be a dream that everyone has the right to fulfil.”") market.

**4) What are the advantages?**

A reverse mortgage is different from other mortgages in that it allows you to withdraw [money from your home](https://www.financedigest.com/selling-advice-five-expert-tips-on-how-to-avoid-gazundering-when-selling-your-home-to-save-you-money.html "Selling advice: Five expert tips on how to avoid gazundering when selling your home to save you money") as opposed to building equity. A reverse mortgage loan generally doesn’t have interest rates or monthly payments, but you’ll have to pay off any [remaining balance when you sell](https://www.financedigest.com/kuehne-raises-lufthansa-stake-to-17-5-as-germany-sells-remaining-shares.html "Kuehne raises Lufthansa stake to 17.5% as Germany sells remaining shares") your home or pass away. This can be an attractive [option for older homeowners who want liquidity or don’t have enough income to support their financial needs](https://www.financedigest.com/7-finance-career-options-to-consider-and-what-you-need-to-know-about-each.html "7 Finance Career Options to Consider and What You Need to Know About Each"). Plus, if your house has declined in value, getting a reverse mortgage means you could use your home equity without selling it. And if you don’t end up using all of the funds from your loan, those [assets will transfer directly to future](https://www.financedigest.com/4-ways-todays-investor-can-future-proof-their-assets.html "4 Ways Today’s Investor Can Future Proof their Assets") heirs when you die — typically without any tax implications.

Reverse mortgages are the answer to many of the senior citizens’ financial problems, especially as they do not require taxes and have multitude of [ways in which they can receive money](https://www.financedigest.com/best-ways-to-make-money-online.html "Best ways to make money online") from it. Yet, deciding to get a reverse [mortgage means to know](https://www.financedigest.com/4-things-you-need-to-know-about-mortgages.html "4 Things you Need to Know About Mortgages") that when one dies or moves out the home may not be part of the family legacy. There are also several scams that fall into reverse mortgages, so it is important to understand all the implications before deciding on getting it. But an informed decision will ultimately be the right one.

**Produced in association with Craig Lebrau**


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