With your 60s knocking at the door, you might want to look for home equity loan options by opting for a reverse mortgage. To start with, a reverse mortgage is a reverse loan where you can put your house as collateral for a regular monthly advance or credit line account.

Unlike other regular home loans, the borrower has no obligation to repay until the last surviving borrower decides to sell or re-buy. To qualify for this reverse mortgage, one needs to be at least 62 years and above, residing in the same state as the house, and must own a large chunk of the equity in the home. This scheme is specially designed for the elderly above 60 years to help them get a steady monthly cash flow by mortgaging their homes.

Ideally one who wishes to stay in the primary residence during retirement or wishes to maintain assets and investments during retirement must apply for a reverse mortgage. A reverse mortgage works perfectly for someone who owns equity in the home. This mortgage is beneficial in terms of cash availability and tax exemptions on the money you receive, and one can continue to stay without the trouble of a lender claiming their assets. Also, in case you have to keep up with property tax, homeowners insurance, and maintenance of the house, a reverse mortgage will help.

Since the DNA of a reverse mortgage is quite different from other home equity loans, the cost would ideally include mortgage insurance premiums, third party fees, loan servicing and origination fee. The on-going costs to avail reverse mortgage would include loan servicing fee, annual insurance premiums, and long-term property costs.

Now that you own an ideal equity in your existing home, you don’t get the entire value of the home, but a principal amount that depends on the age of the youngest borrower, current interest rates, HECM FHA mortgage limit, and home valuation. The trick to this mortgage is the older you are and the more your property is worth, the higher is the principal amount. If your reverse mortgage works with a fixed rate interest, a lump sum is promised as the payment.

In case of variable rate of interest, one can either get equal monthly payments for months, line of credit, and a combination of line of credit and fixed monthly payments for a set time. All the money borrowed has no repayment clause until the borrower passes away, moves, or leaves the primary residence. All you need to do is shop for the right deal or lender that will assess your current financial condition, credit history, property worth, and any outstanding mortgages to get the right type of reverse mortgage such as proprietary, single-purpose, and home equity conversion. One of the most important basics of a reverse mortgage is to avoid any common scams, such as contractor and veteran loans.

When you start looking for the right lender, ensure that it is a respectable brand with years of experience in reverse mortgage. Along with that, it should offer a competitive rate of interest and great customer service. Also, make sure that you compare all the loan terms, especially the margin effects to receive fair and high amounts on the loan.

Also double check if your lender is HUD-approved. One of the most important basics of reverse mortgage is to find the right lender that will help you get a loan by withdrawing only a portion of their home equity and not pay until one leaves the house. Also, ensure that your lender understands the basics of a reverse mortgage in terms of the different types, including proprietary, single-purpose, and home-equity conversion mortgages.