Seniors over the age of sixty two looking for a way to supplement their retirement income should consider reverse mortgages. Many seniors have seen their retirement assets dwindle or be severely devalued due to fluctuations in the stock market or simple inflation. A reverse mortgage is a simple concept. A bank will loan money to be paid on a fixed schedule based on the equity of the senior's home. They are called reverse mortgages because the lender is making payments to the  homeowner rather than vice versa. It should be noted that all taxes, insurance, and fees will be subtracted from the amount to be paid to the homeowner. The loan is called due when the borrower dies, sells their home, or the home is no longer considered a primary residence.

One of the most attractive attributes of a reverse mortgage is the fact that no taxes are paid on and payments. It is also worth mentioning that SS benefits and Medicare benefits will not be affected by any reverse mortgage a senior might take out.  One area that special attention needs to be paid to is what defines a primary residence. As mentioned above, the loan is called due once the home is no longer considered a primary residence. There are cases where seniors have had long hospital stays or spent time in a convalescent home only to have their house taken by the bank and sold.

There are some initial costs when taking out a reverse. There is an origination fee that must be paid by the homeowner. The amount of the origination fee varies from lender to lender. A Reverse Mortgage uses compound interest and typically has a variable interest rate. The longer the senior receives payments the more they owe.  A homeowner's equity can gradually be full depleted leaving their heirs with nothing to inherit. Homeowners who take out a reverse mortgages still retain the title to their home and are responsible for all taxes and insurance.