Would learning how to do a reverse mortgage financially benefit you? Reverse Mortgages can be confusing, usually because of misinformation and an overall misunderstanding of the process. Its really not as baffling as you might think it to be.

First and foremost is knowing the steps for qualification. One misconception is that your home must be free and clear of any mortgage - not true. You can still owe as much as 65% of the appraised value of your home on your existing mortgage and still qualify for a reverse mortgage. The greatest benefit here, of course, is the elimination of your continued months after months after months of mortgage payments.

When the Reverse Mortgage law was signed by President Ronald Reagan in 1988 it was done with the idea of helping senior citizens supplement their income and the ideal situation, at that time, being an elderly person or couple who had no one to leave their home to with their estate. The senior citizen(s) could pull a great deal of the equity out of the home to help supplement their income, to take a vacation, buy a new automobile, use the money for what they wanted or save it for later.

However, today, the HECM or Home Equity Conversion Mortgage which is the correct name for the reverse mortgage, can be used by anyone 62 years of age or older.http://www.reversemortgage.org/default.aspx?tabid=232 The home will still become a part of your estate. You are never obligated to re-pay the funds you receive for as long as you live in the home and the title remains in your name.

Also because the FHA/HUD program is insured by the US Government, you will never owe more than your home is worth - even if you exhaust all of the equity in the home.http://portal.hud.gov/portal/page/portal/HUD/federal_housing_administration

The following steps will provide you with some very important information that can help you make an informed decision.

The content in this page is not a substitute for professional financial advice. Please contact a finance professional before using the information presented here.

Once you begin the process, you are required by law to speak with a Reverse Mortgage Counselor as soon as possible - for which there is a fee, usually from $75.00 - $150.00 or more.http://reversemortgageguides.org/reverse_mortgage/counseling/ However, since their fees vary and all counselors must be federally approved why not choose the one with the lowest fee.

The counselor must mail you one or more copies of a certificate verifying that you received the federally mandatory counseling - without the certificate you CANNOT get the reverse mortgage.

Some counselors will also agree to be listed on the HUD and are paid out of the equity in your home, which results in no out of pocket expense to you. Your reverse mortgage advisor, by law, must provide you with a list of at least 10 federally approved counselors to choose from - he/she cannot recommend one.http://reversemortgagedaily.com/2008/06/11/fha-issues-clarification-for-reverse-mortgage-advisor-program/This counseling session can be done over the phone in the convenience of your home.

One of the major complaints about the reverse mortgage, though, is what seems to be the unusually high fees associated with it - but are they really? All of the fees associated with a reverse mortgage can be deducted from the equity in the home.

All home owners requesting a reverse mortgage must have their home appraised by a Federal Appraiser, which will be arranged by your loan officer. In most cases, the homeowner will have to pay for the appraisal up front but will usually be reimbursed at closing.

The next few points will highlight some of the other fees associated with the Reverse Mortgage.

Usually the fee for a reverse mortgage is 4% of the total of the appraisal of the home with 2% as an origination fee for the Mortgage Company and the other 2% for the provision of what is known as PMI or Private Mortgage Insurance. This insurance sounds like it will benefit the homeowner but in actuality it is for the benefit of the mortgage company. Private mortgage insurance is required by the Federal Government anytime more than 80% of the home is mortgaged and since most reverse mortgages eventually exceed that barrier private mortgage insurance is mandatory.

Since property values continue to plummet, PMI will also guarantee that the lender will receive total reimbursement of the mortgage from the insurance provider at the time of its fruition - in this case, by the US Government.

Another fee associated with the process is called a Monthly servicing Fee which ranges from $25.00 - $35.00 per month. At least 10 years (120 months) of the servicing fee is taken by the mortgage company in advance - again, out of the equity in the home. However, some companies are waiving the service fee on a fixed interest reverse mortgage.http://www.reversemortgage.net/no-more-service-fees/

If you do not currently have a mortgage and opt for an ARM this fee will be easier to handle when you keep in mind that you have access to your equity - many thousands of dollars and you NEVER have to pay it back FOR AS LONG AS YOU LIVE IN YOUR HOME. http://www.mortgageqna.com/reverse-mortgage/

When you begin this journey you'll need to contact someone who is well versed in the field of reverse mortgages - they differ a bit from Conventional Mortgages. Try to find a lender that is close by so that you can deal with the officer on a face-to-face basis. Talk with a friend and ask if they know someone who has gotten a reverse mortgage. You'll need proof of Casualty Insurance and that your Property Taxes are currently paid. Don't be afraid, this is not at all difficult and you'll wonder why you didn't consider it sooner. With the value of homes continuing to spiral downward get the equity out of your home now before it loses any more value.

Remember:

1. All parties on the reverse mortgage must be at least 62 years old; i.e if one person is 62 and the other is 59, the reverse mortgage can still be written, however the 59 year old can live in the home but cannot be included in the mortgage.
2. The amount of equity allowed from the home is based on the younger of the two qualifying homeowners; i.e. one person is 73 and the other 68 - the equity drawn from the home would be based on the 68 year old person.
3. The home must be your Primary Residence.
4. Your name will remain on the title.
5. The financial institution cannot take your home - for as long as you live in it - even if you use all of your available equity.