How a Reverse Mortgage Works
This loan is a federally insured “Home Equity Conversion Mortgages” (HECMs). Provides a loan that will allow you to access your home’s equity to obtain cash for your retirement needs. Therefore, allowing you to have access and liquidly from your home without having to sell it. It is a safe and secure way for your “Golden Years” to be supplemented with income.
A Reverse Mortgage allows you to access a portion of the equity in your home to obtain tax-free cash without having to make monthly loan payments. If you’re 62 years of age or older and have sufficient home equity, you may be able to get the funds you need to:
- Pay off your existing mortgage*
- Make necessary home repairs or renovate your home
- Pay off medical bills, vehicle loans or other debts
- Fund a major purchase
- Take a dream vacation
- Pursue hobbies, sports and other recreational interests
- Create a “safety net” emergency fund for unplanned expenses
Eligibility and Requirements
To be eligible for a Reverse Mortgage loan, some key requirements are:
- Be at least 62 years of age or older
- Live in your home as your primary residence and have sufficient equity in it
- Be able to pay off your existing mortgage through the Reverse Mortgage
- Live in a single family home, two-to four-unit owner-occupied home, townhouse, approved condominium unit, or certain manufactured homesYou must also meet the following conditions to obtain a Reverse Mortgage:
- Attend a HUD-approved counseling session
- Maintain your home according to FHA requirements*
- Continue to pay property taxes and homeowners insurance
Benefits of a Reverse Mortgage
- Security – government-insured loan
- Availability – generally no income or credit score requirements
- Peace of mind – eliminates your monthly mortgage loan payment
- Home ownership – you maintain the exclusive title to your home
- Predictability – repayment obligation is limited to the value of your home, provided you or your heirs decide to sell the home
- Equity growth – you or your heirs receive any remaining equity once loan is repaid
Qualifying for a Loan
The amount you receive is based on current interest rates, the age of the youngest borrower, and the appraised value of your home (up to certain limits). In general, the older you are, the more valuable your home, and the lower your loan balance, the more money you can expect from a Reverse Mortgage.
Getting Your Money
You can get your money in a lump sum, fixed monthly payments, a line of credit that you can draw upon as needed, or a combination of these options.
Repaying the Reverse Mortgage
Repayment is not due as long as you live in the home as your primary residence, continue to pay required property taxes and homeowners insurance, and maintain the home according to FHA requirements. You or your heirs will not be required to repay more than the value of your home at the time the loan is repaid, even if your loan balance exceeds the value of your home provided you or your heirs decide to sell the home. Best of all, any remaining equity goes to you or your heirs once the loan is repaid