Family Reverse Mortgage

Real Estate Sales Representative with Castles Unlimited®


A reverse mortgage is a loan, with your home as collateral, that you do not have to pay back for as long as you live there. With a reverse mortgage, you can  receive cash without to repay the loan each month. The cash you get from a reverse mortgage can be paid to you in several ways:

  • in a single lump sum of cash;
  • as a regular monthly payment;
  • as a line of credit that lets you decide when and how much of your available cash is paid to you; or
  • as a combination of these payment methods.

No matter how this loan is paid out to you, you generally don't have to pay anything back until you die, sell your home, or permanently move out of your home. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older.

The new twist on a standard reverse mortgage, is a family reverse mortgage, where the lenders are family or friends. The lender gives the person receiving the reverse mortgage a formal loan backed by the equity in their house. The payment can be in the same forms as a standard reverse mortgage. Because it is a loan payment, not a gift the interest is tax free. The lender eventually collects what is owed in the form of home equity.  Generally family reverse mortgages are less expensive that standard reverse mortgages and do not have all the restrictions, such as having to be 62 years of age or older.

Setting up a family reverse mortgage is complicated, probably the best bet is to hire a peer-to-peer lending service such as Virgin Money. A peer-to-peer lending service would do all the paperwork and keep records of the loan.  You do not have to hire a peer-to-peer lending service to set up a family reverse mortgage. Alternatively, you could hire your own lawyer to draw up and record the loan agreement.

see my website:


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At

Spam prevention
Show All Comments
Terry & Bonnie Westbrook
Westbrook Realty Broker-Owner - Grand Rapids, MI
Westbrook Realty - Grand Rapids Forest Hills MI Re
Good to know my parents just did a reverse mortgage and this information helps Thanks
Nov 23, 2007 12:08 AM #1
Mary Doner
Century21 Access America - Wolcott, CT

Hi Jim,

A quick question for you. This type of mortgage confuses me. And maybe that is because I don't know enough about it. I am assuming you can only mortgage the amount that your home is worth in today's market, yes? If that is the case, what happens when the amount you receive ( if taking it in monthly allotments) becomes greater than the equity in the home? People are living a lot longer than they used to. Does this mean the home owner is no longer a home owner and has to leave his/her home? Just curious.

Nov 23, 2007 12:27 AM #2
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


James Lowenstern

Castles Unlimited. Newton MA Real Estate
Ask me a question

Additional Information