What is a Reverse Mortgages?

Unlike traditional mortgages, with a Reverse Mortgage, you have the option of making a monthly payment or having the payment made from your equity. Beyond accessing cash, this is a great way to pay off your existing mortgage with a new Reverse Mortgage and not be required to make a monthly payment.

 

A Reverse Mortgage can be a useful tool in a personal financial plan for many retirees, but it is often overlooked. Much of that is due to misconceptions and outdated elements which no longer exist. This program is not only for seniors who need cash assistance, it is also beneficial for seniors as a valuable retirement strategy.​

Reverse mortgages were specifically designed to help seniors access built up equity in their homes and convert it to tax-free cash - to be used for any reason.

What happens when I sell?

Just as with any mortgage, once you sell the home, the proceeds from the sale pay off the remaining balance of the Reverse Mortgage and you retain any remaining equity.

There are two main types of Reverse Mortgages

The first is the HECM Loan for seniors 62 and older living in a single family home, or FHA approved condo project, offering loan amounts to  $765,600, starting January 1, 2018. 

The second is Jumbo loan for seniors 55 and older, where FHA approval is not necessary, offering loan amounts to $4 million.

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Senior Concerns
Reverse Mortgage
Traditional Mortgage

Purchase/Refi/Line of Credit

Purchase/Refi/Line of Credit

Can I stay in my home for the rest of my life without ever

making a monthly mortgage payment?

Am I protected from foreclosure for not making monthly mortgage payments?

Will I have more of my income available to put towards savings or anything else I wish?

Do I have the option of making, or not making, a monthly payment and choose the amount I pay?

Is the qualifying process quick and with fewer requirements?

Am I protected from the lender reducing or eliminating my line of credit in the future?

Can I receive monthly payments for the rest of my life as long as I'm living in my home?

Can I get a line of credit that increases over time to have more money available in the future if needed?

Is the loan paid off when I sell my Home?

Do I own my home throughout the life of the loan?

Am I protected from having to come up with cash if I sell the home for less than the outstanding loan balance?

YES
NO
YES
YES
NO
NO
YES
NO
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
YES
YES
What is a HECM Reverse Mortgage?

HECM stands for Home Equity Conversion Mortgage and is a type of loan developed by the federal government to allow retirement aged Americans age in their home without the stress and worry about cost of living increasing. If qualified it allows you to borrow against the equity you’ve established in your home without repaying the loan for as long as you live in the home. Instead of making monthly payments, you can choose to receive monthly income…….for as long as you live in the home!

HECM Qualifications

  • This loan is only available to individuals of retirement age so you must be at least 62 years or older.

  • You must also own your home outright, or have a low enough remaining mortgage balance for the reverse mortgage to pay it off.

  • Your home must be your primary residence and you cannot move for more than 12 consecutive months.

  • You must complete a counseling session with a HUD-approved counseling agency – The U.S. Department of Housing and Urban Development (HUD) provides a list of third party agencies for you to choose from. The purpose of this requirement is so you can be made aware of all of your options, and evenly weigh the pros and cons of each.

Property Types that Qualify

  • Your home must be a single family home or a 4-unit maximum multiple family home with one unit occupied by you.

  • If your property is a multiple family home, then one of the units must be your primary residence.

  • Your home can be a manufactured home as long as it meets FHA requirements.

  • Your home can be a condominium project if it is HUD-approved.

 

Financial Obligations

  • You must be financially able to pay your property taxes, insurance, and home maintenance and any applicable HOA fees.

  • You cannot be delinquent on any federal debt.

What is a Jumbo Reverse Mortgage?

A Jumbo Reverse Mortgage is similar to the HECM in the sense that you can pull out equity without the need to make a monthly payment but there are some differences. This loan goes up to $4 million dollars, you are eligible at age 60, there are less fees than a HECM and there is no need for FHA approval for Condo projects.

 

Qualifications

  • This loan is only available to individuals of retirement age so you must be at least 60 years or older.

  • You must also own your home outright, or have a low enough remaining mortgage balance for the reverse mortgage to pay it off.

  • Your home must be your primary residence and you cannot move for more than 12 consecutive months.

  • You must complete a counseling session with an approved counseling agency. The purpose of this requirement is so you can be made aware of all of your options, and evenly weigh the pros and cons of each.

Property Types that Qualify

  • Your home must be a Single Family Residence (including PUD & Townhomes), lender approved Condo project or 1-4 units.

  • If your property is a multiple family home, then one of the units must be your primary residence.

Financial Obligations

  • You must be financially able to pay your property taxes, insurance, home maintenance and any applicable HOA fees.