Reverse Mortgage Loans

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you. However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

A reverse mortgage allows you to access the equity you've built in your home. It's ideal for those who plan to stay in their homes for an extended period and have built decent equity in their homes.

To qualify for a reverse mortgage, you must:

Be at least 62 years old
Own your home outright or have significant equity
Live in the home as your primary residence
Meet financial responsibility requirements (ability to pay taxes, insurance, and maintenance)
Complete HUD-approved counseling
The amount you can borrow depends on your age, home value, and current interest rates. Older borrowers and higher home values typically qualify for larger loan amounts.

Contact us today for a free estimate.
 

Yes. You may apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage.

To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest. A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments. With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.

When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid. All proceeds beyond the amount owed belong to your spouse or estate. This means any remaining equity can be transferred to heirs. No debt is passed along to the estate or heirs.

The amount varies by borrower and depends on:

• Age of the youngest borrower
• Current interest rate
• Lesser of appraised value or the HECM FHA mortgage limit of $625,500 or the sales price; and
• Initial Mortgage Insurance Premium

If there is more than one borrower, the age of the youngest borrower is used to determine the amount you can borrow.

FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA-approved lender. You can locate a FHA-approved lender by searching online at www.hud.gov or by contacting a HECM counselor for a listing. Services rendered by HECM counselors are free or at a low cost. To locate a HECM counselor Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you.

You may be eligible for one of the following payment plans:

• Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term - equal monthly payments for a fixed period of months selected.
• Line of Credit - unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
• Modified Tenure - combination of line of credit and scheduled monthly payments for as long as you remain in the home.
• Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
• Single Disbursement Lump Sum – a single lump sum disbursement at mortgage closing.

By law, you have three calendar days to change your mind and cancel the loan. This is called a three day right of rescission. The process of canceling the loan should be explained at loan closing. Be sure to ask the lender for instructions on this process. Mortgage lenders differ in the process of canceling a loan. You should ask for the names of the appropriate people, phone numbers, fax numbers, addresses, or written instructions on whatever process the company has in place. In most cases, the right of rescission will not be applicable to HECM for purchase transactions.

The loan becomes due when you pass away, sell the home, no longer use it as your primary residence, or fail to pay property taxes, homeowner's insurance, or otherwise comply with loan terms.

Federally insured HECM reverse mortgages are designed with consumer protections. You can stay in your home, and the mortgage insurance guarantees you'll never owe more than your home is worth.

Costs include origination fees, appraisal fees, mortgage insurance premiums, and closing costs. The specific amounts depend on your home's value and the loan terms you select.