Since 1989, FHA reverse mortgages have been an option for seniors who required additional financial security in their retirement. Almost 700,000 seniors have received FHA reverse mortgages since 1989 and three-quarters of those have been in the last five years. However, recent changes to the laws governing reverse mortgages will make it more difficult for some seniors to obtain a reverse mortgage yet will provide additional protection to those who do.

The age requirement remains the same, at least one of the borrowers must be 62 years or older, and no payments are due until the last borrower dies or moves permanently out of the home.

The proceeds from reverse mortgages can be issued as a lump sum, as fixed payments, or as a line of credit which provides flexibility. Since the interest rates on FHA reverse mortgages are now substantially lower than they have been, how you elect to choose your money can make a considerable difference in the balance owed at the time of repayment.

Though there has been an overall decline in property values, the loan limits on reverse mortgages have remained at $625,500 for the past couple years. That being said, mortgage insurance premiums have increased from .5 percent to 1.25 percent on FHA reverse mortgages.

A new type of FHA reverse mortgage, called the HECM Saver, does requires less mortgage insurance but also has loan limits up to 18 percent lower than previous FHA reverse mortgages. The HECM Saver FHA reverse mortgages are aimed at those seniors who want a smaller, more affordable loan.

Relatively new legislation prohibits lending institutions from requiring that any additional financial service, such as long-term care insurance or an annuity, be purchased in conjunction with FHA reverse mortgages.

Reverse mortgages can be used as a good financial tool for those people who wish to convert their home’s equity into usable funds. There are more and more options becoming available to help seniors live comfortably throughout their retirement.