Live Comfortably in Retirement
A reverse mortgage can help seniors in need of cash whose assets are mainly tied to the value of their home. A reverse mortgage allows homeowners who are 62 years or older to convert part of their primary home’s equity into cash that can be used to pay for living expenses, healthcare, debt, or home improvements – without having to sell the home. Unlike a traditional mortgage, you will receive money from a lender instead of making monthly payments.
With a reverse mortgage, owners will continue to keep title and control of their home. They can occupy the home provided they are able to cover maintenance, insurance, and property taxes. The loan becomes due and payable when the owners decide to move out, sell the home, or do not meet the loan obligations. In the event of death, the owners’ heirs would assume responsibility for the loan.
- Homeowner keeps full title and control of home
- Receive funds as lump sum, fixed monthly payment, or line of credit
- Supplement existing income and cash flow
- Cover in-home care and other medical expenses
- Pay off high-interest rate debt or make home renovations
- Purchase additional real estate
- Social Security or Medicare benefits typically not affected
- No income and flexible credit requirements
types of reverse mortgages
The most commonly offered reverse mortgage is called the Home Equity Conversion Mortgage (HECM), which is federally-insured and backed by the U. S. Department of Housing and Urban Development (HUD). This reverse mortgage has no income limitations or medical requirements, and the funds can be used for any purpose.
As part of the application process, borrowers must meet with a counselor from an independent government-approved housing counseling agency. The HUD counselor will explain different types of reverse mortgages, mortgage insurance, origination and servicing fees, closing and other costs, and payment options. This helps borrowers understand the cost of the loan and how it can impact their financial situation. After counseling, attendees can find out how much they can borrow with a HECM. There’s a charge for counseling, which can covered by loan proceeds.
Other types of reverse mortgages include single-purpose and proprietary. Offered by some state, local, and non-profit agencies, single-purpose mortgages can be used for one lender-specified purpose, including home improvements, repairs or property taxes. Proprietary reverse mortgages are backed by private lenders and are usually for higher-value homes, allowing the borrower to qualify for more funds than current conforming loan limits.
Reverse Mortgage Requirements
- Youngest homeowner needs to be 62 years of age or older- Hold considerable equity or own the home outright
- Occupy the property as a primary residence
- No delinquent federal tax debt
- Have financial resources to cover ongoing property tax and insurance, including Homeowner Association (HOA) fees
- Attend a counseling session by a HUD-approved counselor
The following eligible property types must meet all FHA property standards and flood requirements:
- Single-family home
- 2-4 unit home with one unit occupied by the borrower
- HUD-approved condominiums or townhomes
- Manufactured home that meets FHA requirements
- Verification of Income, assets, monthly living expenses, and credit history
- Timely payment of real estate taxes, hazard and flood insurance premiums
How Much Can I Borrow?
The maximum amount a homeowner can borrow, known as the principal limit, is based on the following factors:
- Age of the youngest borrower or eligible non-borrowing spouse
- Current interest rates
- Lesser of the appraised value of property and maximum 2022 lending limit is $970,800 (HECM)
We also offer a Jumbo Reverse Mortgage that exceeds conforming lending limits.
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*No monthly mortgage payment so long as you comply with the loan terms that include staying current on property taxes, homeowner’s insurance, and maintenance. Borrowers must be at least 62 years of age, own a home, have enough equity built into the home. Borrowers must own the home and the home must be your primary residence. You will be able to stay in and keep your home under normal circumstances provided you comply with the loan terms that include staying current on property taxes, homeowner’s insurance, and maintenance. If you are on Medicaid or receive Supplemental Security Income (SSI), any reverse mortgage proceeds may affect your benefits. Consult with your benefit agency. This information is not from HUD or FHA and has not been approved by any government agency. Additional requirements and restrictions apply.