Unlike a traditional mortgage that you pay back each month, reverse mortgages provide payments to you. They, in effect,"reverse" the direction of the mortgage payments. With reverse mortgages, no repayment of the loan is required until you no longer occupy the home as your principal residence. At that time, the loan is due and payable. If you and any of your co-borrowers are at least 62 years old and own your home free and clear of a mortgage or have very little mortgage principal outstanding, reverse mortgages may be for you. They provide an excellent opportunity for older Americans to enjoy extra security and financial support. To provide additional housing options for older homeowners, HUD insures reverse mortgages under the Home Equity Conversion Mortgage (HECM) program. Fannie Mae supports the HECM program and the options it offers older homeowners. Lenders offer a wide array of reverse mortgages:

A Home Equity Conversion Mortgage (HECM) is a type of home loan that lets homeowners aged 62 or over with little or no remaining balance on their mortgage convert their equity into cash. The equity can be paid to the homeowner in a lump sum, in a stream of payments, draws from a line of credit, or a combination of monthly payments and line of credit.
Whatever payment plan you select, you do not have to repay any part of this reverse mortgage until you sell the home, vacate it for another reason,or violate the loan's terms and conditions. At that time, you pay the loan balance, plus any accrued interest. Any proceeds above that amount go to you or to your estate.
Developed by the Federal Housing Administration (FHA), the HECM mortgage provides a cash growth feature not found with some other reverse mortgages – check with your Fannie Mae-approved lender to see how this works based on your personal needs and your payment plan.

Advantages :

• The funds are yours to spend in any way you choose.

• There are no monthly payments with a HECM.

• Your loan funds do not affect Social Security or Medicare benefits. (If you receive Supplemental Social Security or Medicaid,these benefits may be affected.)

• You do not have to pay back the loan until you sell your home or no longer use it for your primary residence. Then, you or your estate will repay the cash you received from the HECM, plus interest and other finance charges to the lender. This means that the remaining equity in your home can be passed on to your heirs through the sale of the property.

• You will never owe more than the value of the home at the time of repayment, even if the loan balance exceeds the value of your property. This means no debt will ever be passed along to the estate or your heirs.

Details :

• You and any co-borrowers must be at least 62 years old.

• You must own your home outright – or carry a small mortgage balance.

• Eligible properties include a single-family home, a two- to four-unit dwelling, a condominium or a manufactured home. All housing types must meet Federal Housing Administration (FHA) guidelines. (Ask your lender if your property qualifies.)

• Your home must be your principal residence, which means you must live in it more than half the year.

• You must attend pre-application reverse mortgage counseling before you apply for the loan.

• You must keep applicable taxes current, as well as maintain insurance coverage on your home.

• The amount you can borrow with a HECM depends on the age of the youngest borrower(s), the interest rate, how much your house is worth, and the maximum claim amount. In general, you can get between one-third and one-half of your equity as a line of credit or as a lump sum payment.

• The balance of funds advanced against the equity in your home is due and payable when you relinquish your home as a primary residence, or if the borrower(s) pass away. You may have to pay off the debt if you fail to pay property taxes or insurance or if you do not maintain your property.