Reverse mortgages

What is a Reverse Mortgage?

Unlike a conventional loan, a reverse mortgage eliminates the homeowner’s requirement to make monthly mortgage payments. Instead, the borrower receives money from the lender — either monthly, via a line of credit or in a single lump sum at closing.

A reverse mortgage is an FHA insured home loan that allows homeowners 62 years of age and older to borrow against their home's equity.

Reverse Mortgage Basics:

• HUD Reverse Mortgage = HECM = Home Equity Conversion Mortgage

• A HECM can be used for a Standard Refinance, refinancing an existing HECM (HECM to HECM) or to finance the Purchase of a Primary Residence

• Primary Residence Only (Owner-Occupied 1 – 4 unit, Condominiums, PUD’s, and Manufactured Homes)

• Minimum Age = 62 (Youngest Borrower’s Age is used to determine benefit even if less than 62)

• Non-Borrowing Spouse (less than 62 years old) has protections (must meet qualifying attributes required by HUD to be an Eligible NBS)

•  #1 reason Seniors get a Reverse Mortgage = No Monthly (Principal & Interest) Mortgage Payment 

• Non-Recourse: The Borrower, nor their estate, ever owes more than the property is worth

• HUD Required Counseling

• The Loan Amount is called the Principal Limit (PL) and is based on Age, Value and Expected Rate

Reverse Mortgage MYTHS!

There have been many misconceptions about reverse mortgages over the years...

• The bank owns my home – FALSE

• They are very expensive - FALSE

• My children or estate will owe money – FALSE

• My social security benefits will be reduced or forfeited – FALSE

• My home isn't paid off, I can't get one – FALSE