A reverse mortgage is a loan that homeowners aged 62 and over may take out to convert a portion of their home’s equity into cash – WITHOUT HAVING TO MAKE MONTHLY MORTGAGE PAYMENTS. The amount available is determined by the amount of equity in the home and the youngest applicant’s age. The funds can be delivered in monthly payments, a lump sum, a line of credit, or a combination of these methods. The loan becomes due and payable when you no longer live in the home or if you’ve failed to keep your taxes, insurance and home maintenance up-to-date.
Currently, there are three types of reverse mortgages available: Fixed Rate, Variable Rate, & Jumbo. People get reverse mortgages for many different purposes, we will work with you to ﬁnd the best product to suit your individual needs.
In order to qualify, at least one owner/spouse of the property must be 62 years of age or older. You can’t owe too much on the home–the loan proceeds are used ﬁrst to pay off any liens secured by the property; you can then access the remaining amount. There is no credit qualifying with reverse mortgages, because you aren’t required to make monthly payments.
No. You don’t have to repay the loan until you sell the home or quit living in it, and you will never owe more on the loan than the value of the home. Your responsibilities are to maintain the property, and pay your property taxes and homeowners insurance on time. Failure to do so could result in the loan being called in.
The amount available to you through a HUD-approved reverse mortgage depends on your age and the amount of equity in your home (its value minus any loans against it). The “lending limit” or home value limit is $625,500 on the HUD-approved program. That $625,500 ﬁgure is NOT the maximum loan amount, it is the maximum value that is used in the initial eligibility calculation. Jumbo reverse mortgages offer higher loan amounts for those with higher-value homes ($1,000,000 +).
First, the proceeds are applied to any debt remaining on the original mortgage and the loan’s closing costs. The rest is up to you–take the money in a lump sum, choose monthly payments, or opt for a line of credit, with interest only accruing on the amount you use. Additionally, the reverse mortgage line of credit increases in availability each month based on the unused portion. There are no restrictions on how your proceeds can be used.
If you’re planning a two-year world cruise or anticipate moving fairly soon, a HECM is not for you. The longer you stay in your home, the cheaper the ﬁnancing ends up being. And if you only need a small amount, like $10,000 to ﬁx a porch, a home equity loan is probably a cheaper way to get ﬁnancing. But a study by AARP found that about 90% of seniors who took out HECMs were glad they did. See if you might be one of them–let our experts ﬁnd the most suitable reverse mortgage product for you.