All About Reverse Mortgage

What is a reverse mortgage?

A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home, without having to sell the home, give up title, or take on new monthly mortgage payments.

In fact, with a Reverse Mortgage there are no monthly mortgage payments - ever!

Here’s how it works:

Qualifying homeowners can choose to receive tax-free payments either on a monthly basis, in a lump sum, or as a line of credit.
No income or credit checks are required.

No repayments are required while a borrower lives in the home.

Social Security and Medicare benefits are not affected.

Your name always remains on title, and ownership passess to your heirs should you decide to stay in the home until your passing.

Keep in mind:

Borrowers must continue to pay homeowner’s insurance and property taxes during the loan period. It is also the borrower’s responsibility to keep up with repairs. In fact, if a borrower fails to adhere to any of these obligations, it may become immediate cause for the loan to become due. In which case, it would become payable in full.

Do I qualify for a reverse mortgage?

You must be age 62 or older. And you must occupy the home as your primary residence – for the majority of the year. Any existing mortgage must be paid off from the proceeds of the reverse mortgage.

Each borrower listed on the title must apply for the reverse mortgage loan, attend a HUD counseling session and sign the application papers. The HUD counseling is either handled in person, or over the telephone.

Does my home qualify for a reverse mortgage?

First of all, your residence must meet HUD standards. The reverse mortgage must also be the only mortgage held against the residence. That means that if there is a current mortgage on the property, it may be able to be paid off with the proceeds of the reverse mortgage.

Examples of qualifying homes:

Single Family One-Unit Residences
2-4 Unit Owner-Occupied Residences
4 Unit + Condominiums

Ask your lender if these residences qualify:

Manufactured Homes
Planned Unit Developments

How is the amount of the proceeds determined?

The age of the youngest borrower
The appraised amount of the property
The current interest rate

What are my reverse mortgage options?

HECM -- The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage that is insured by the Federal Housing Administration (FHA). The FHA guarantees that HECM lenders meet their obligations, governs how much HECM lenders may loan to qualified borrowers, and limiting loan costs. Because this is a government insured program, loan counseling is required, by an approved HUD counselor.

HECM offers 4 draw options: