American Reverse Mortgage

In order to qualify for an American reverse mortgage, the borrower must be at least 62 years of age. There are no requirements of minimum income or credits. Still, one of the conditions to get a reverse mortgage is to pay off any existing mortgage. It is important that before deciding to get a reverse mortgage, applicants must seek financial counseling from any source approved by the Department of Housing and Urban Development.

When the United States Congress passed the Housing and Community Development Act of 1987, on December 22 1987, the reverse mortgage became a valuable tool for all senior Americans. On February 5, 1988, President Ronald W. Reagan signed the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) and the first reverse mortgage was made on October 19, 1989.

The Federal National Mortgage Association (FannieMae) created the Home Keeper, another American reverse mortgage program which became available in 1996. On January 27, 2007 the Independence Plan was announced and it is a Jumbo Reverse Mortgage with no upper maximum. These are the three reverse mortgages used in America and they offer the possibility for all senior citizens to use the equity built in their homes in order to provide needed financial security. Since the American reverse mortgage became available in 1989, more than 338,296 seniors have obtained an FHA HECM.

The amount of money that a borrower can receive from an American reverse mortgage may depend on the value of the house, his age and the starting interest rate. He can choose from four ways of getting paid: in a lump sum, a monthly payment, through an increasing line of credit or a combination between all three. The loan advances are not taxable and they do not affect Medicare benefits or social security.

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