What is a reverse mortgage?

A Reverse Mortgage is a loan that enable seniors, age 62 and older, to convert part of their home equity into "tax free" income - without having to sell their home, give up title to it, or make monthly mortgage payments. The loan becomes due when the last borrower(s) permanently leaves the home.

How do you qualify for a reverse mortgage?

Borrowers need to be a least 62 years of age, own their home and live in it as their primary residence. There are no income or credit qualifications. The amount you receive is based on: age, appraised value of home, FHA lending limit and current interest rates.

How is a reverse mortgage like an equity line? How is it different?

Both a Reverse Mortgage and a home equity line tap the equity you have built up in your home to provide you with available cash. However with a home equity loan you must qualify based on your income and credit qualifications and you must make monthly payments. With a reverse mortgage there are no income or credit requirements and you are not required to make monthly payments while you are living in your home.

I still have a mortgage on my home. Will I qualify for a reverse mortgage?

You may still be eligible for a reverse mortgage even if you have a first or second mortgage on your home depending on the amount and the current value of your home. The funds from the reverse mortgage would first be used to pay off any existing debt you have on the property.

How do I receive the cash from a reverse mortgage?

There are a number of options available to borrowers.

A lump sum payment
Regular monthly payments for as long as you live in the home.
Regular monthly payment for a fixed amount of time.
A line of credit to draw from as needed
Any combination of these options.

How is the Reverse Mortgage loan repaid?

The loan becomes due and payable when the last surviving borrower:

Passes away
The borrower sells or otherwise transfers ownership of the property.
The last surviving borrower has been unable to occupy the home for more than 12 consecutive months

What are the borrower's responsibilities?

The borrowers responsibilities are to attend a required counseling session prior to loan application, maintain the home and continue to pay property and insurance on the property.

What if I owe more than the value of my home?

The reverse mortgage is a non recourse loan meaning that you never owe more than the value of the home when the home is sold. If your loan is sold to pay off the loan you or your estate will not have to pay back more than you receive from the sale of the home. However, if you or your heirs or your estate choose to keep the home, they must pay back the entire loan balance even if it is greater than the value of the home.

What are the costs involved with a Reverse Mortgage?

Most reverse mortgage typically include an origination fee, third party closing costs such as attorney fees, an appraisal, title etc, a monthly servicing and upfront mortgage insurance premium. These charges can be paid from the proceeds of the reverse mortgage. These costs are added to the principal of the loan and paid with interest when the loan becomes due.

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