REVERSE MORTGAGES -
A reverse mortgage is a unique type of loan used by older Americans to convert the equity in their homes into cash. The money from a reverse mortgage may provide seniors with the financial security they need to fully enjoy their retirement years.
The reverse mortgage has earned its name because the payment stream is "reversed." Instead of making monthly payments to a lender, as with a regular first mortgage or home equity loan, a lender makes payments to you. The money from a reverse mortgage can be used for anything from daily living expenses to home repairs and home modifications.
•Disclaimer: This information is not intended to be a substitute for legal, tax or financial advice. Consult with a qualified attorney, accountant or financial advisor for additional legal or tax advice. This material is not from HUD or FHA and has not been approved by HUD or a government agency.
Reverse Mortgage Qualifications
To qualify for a reverse mortgage you must be at least 62 and own your own home. There are no income or medical requirements to qualify in light of April 2015 financial assessment requirements. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage. In fact, many seniors get a reverse mortgage to pay off a first mortgage.
How does it work?
A reverse mortgage loan allows you to turn some of the equity in your home into cash to improve your
financial situation. With a reverse mortgage loan, you will remain on title and can stay in your home
without making monthly mortgage payments during the loan period.¹ The borrower will be required to
pay for property taxes, home insurance and home maintenance. The loan balance becomes due upon
the occurrence of other events including non-compliance with the loan terms.
This federally-insured loan offers multiple ways to receive the proceeds and gives you the ability to
spend the cash as needed. Common uses of Reverse Mortgage loans include:
- Paying off debt
- Cover costly medical bills and prescriptions
- Home repairs and modifications
- Delay Social Security benefits²
- …and much more!
Important features of a reverse mortgage loan include:
1. Proceeds from a Reverse Mortgage loan are tax-free³.
2. There are multiple ways to receive the loan proceeds, either as a line of credit, a term payment,
a tenure payment or lump sum.
3. Live in your home with no monthly mortgage payments¹ .
¹If you qualify and your loan is approved, a HECM Reverse Mortgage must pay off your existing mortgage(s). With a HECM Reverse
Mortgage, no monthly mortgage payment is required. Borrowers are responsible for paying property taxes and homeowner’s
insurance (which may be substantial). We do not establish an escrow account for disbursements of these payments. A set-aside
account can be set up to pay taxes and insurance and may be required in some cases. Borrowers must also occupy home as primary
residence and pay for ongoing maintenance; otherwise the loan becomes due and payable. The loan becomes due and payable
when the last borrower, or eligible non-borrowing surviving spouse, dies, sells the home, permanently moves out, or defaults on
taxes and insurance payments, or does not comply with loan terms. Call 1-XXX- XXX-XXXX to learn more. A Reverse Mortgage
increases the principal mortgage loan amount and decreases home equity (it is a negative amortization loan). These materials are
not from HUD or FHA and were not approved by HUD or a government agency.
²Social Security benefits estimator available at www.ssa.gov/estimator.
³Loan proceeds are paid tax-free; consult your tax advisor.