What is a reverse mortgage?
An FHA reverse mortgage or Home Equity Conversion Mortgage (HECM), is a government-insured loan intended for homeowners 62 years and older. It is a safe financial tool that allows you to access the equity in your home and convert it into cash. Unlike conventional mortgages there are no monthly mortgage payments as a final payment is deferred until the end of the loan.
How would I receive my funds?
Your Reverse Mortgage funds can be disbursed to you in a few ways depending on the loan product you choose.
You may receive:
- Full or partial lump sum
- Line of credit
- Monthly Payments (tenure or modified tenure plan)
- Combination of any of these.
Certain products allow you have the option to change your disbursement method even after the loan closes. The choice is ultimately yours, but your Loan Officer can help educate you so that you decide on the option that is the best suited for your unique situation.
What are the qualifications for a reverse mortgage?
- You must be 62 years and older
- Own your home
- Live in your home as your primary residence
How do you determine how much money I can qualify for?
How much money you qualify for will be dependent on the following:
- The age of the youngest borrower or eligible non-borrowing spouse
- Your home’s appraised value
- Current interest rates
Are there any restrictions on how I use the money?
Since this is your hard earned equity there is no restriction on how you use your money!
How will my loan eventually be repaid?
Your reverse mortgage loan is repaid when the last borrower leaves the home, passes away or you stop meeting your obligations. What typically happens is that the home is sold and the loan balance is paid. Any remaining equity after the loan is repaid goes to you or your heirs. Heirs also have the option to pay the balance off or refinance the loan balance through another means of financing such as conventional mortgage.
Do I still own my home with a reverse mortgage?
Absolutely. One of the largest misconceptions is that a reverse mortgage is done in exchange for title to your home. With all HECM loans, as long as you meet your obligations you will retain ownership of your home. In the past there has been negative publicity that was largely due to people not following the rules.