Reverse Mortgages

What is a Reverse Mortgage?

This is “fully insured” government FHA program also known as a Home Equity Conversion Mortgage (HECM) which allows for homeowners 62 years old and up to convert a portion of their equity into “tax free” cash from their “primary residence” for most any purpose.
NOTE: You can use a HECM product to purchase a primary residence with cash on hand or (proceeds from sale of existing home) to cover the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

What advantage is there to a Reverse Mortgage?

1. A “peace of mind” -“tax free” loan that requires NO scheduled monthly payment and does not have to be repaid until the last surviving borrower passes or the property is sold.
2. Cash can be taken as a “lump sum” amount, equity line credit, monthly draws or a combination of these choices.
3. Owners remain on title, just continue to occupy as your primary residence, maintain applicable taxes, insurance and upkeep to the property.

You can set aside extra cash for unexpected emergencies, pay overdue bills, buy consumer products or take a trip. It is your CASH; use it the way you want.

How do I qualify for FHA’s HECM reverse mortgage?

Borrower’s must be 62 or older, have the financial resources to pay ongoing property charges including taxes and insurance, and borrowers must live in the home as their primary residence.

Obtain consumer information free or at very low cost from a HECM counselor prior to obtaining the loan. You can find a HECM counselor online or by phoning (800) 569-4287. (Visit www.HUD.GOV for detailed information)

What types of homes are eligible?

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.

Will we have an estate that we can leave to heirs?

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.

How much money can I get from my home?

The amount varies by borrower and depends on:

• Age of the youngest borrower or non-borrowing spouse
• 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.