Reverse Mortgages

Most Reverse Mortgages are insured by the Federal Housing Administration (FHA) and are called Home Equity Conversion Mortgages (HECM). There is no prepayment penalty and both Fixed and Adjustable Interest Rates are available for Reverse Mortgages.

 

This type of loan is called a Reverse Mortgage because the traditional mortgage repayment process is reversed. Instead of making monthly payments to a lender (as with a traditional mortgage), the lender makes monthly payments to you, the borrower.

 

A Reverse Mortgage is a loan that converts the equity in your home into cash that can be used for many different purposes.  It helps people who are in or near retirement and with limited income use the money they have put into their home (now converted to equity) to supplement their retirement income, pay off debts, pay for long-term care and caregivers, pay for health care or apply toward modifying the house to make it more functional (installing wheelchair ramps, medical alert systems) and even preventing foreclosure.  There is no restriction on how a borrower may use their Reverse Mortgage proceeds.

 

If you are at least 62 years old and currently have a mortgage, a Reverse Mortgage could eliminate your current monthly mortgage payment and also allow you to access any additional equity (over and above your mortgage balance) to create accessible cash which is not readily available while in the form of equity in your home.  

 

As long as you live in your home, you are not required to make any monthly payments towards the loan balance.  However, you must still pay the property taxes, homeowners insurance, and if applicable, HOA/Maintenance payments.

 

You will always retain title to your home and can sell or refinance at any time.  When your house is sold or you no longer live there, as long as you or your estate repays the cash received from the lender, plus interest, monthly service fee etc.,

the remaining equity belongs to you or to your beneficiaries. 

Counseling is required for all reverse mortgages and may be conducted face-to-face or by telephone. It is an important consumer protection tool that‘s been built into the Reverse Mortgage process. Prior to applying for your Reverse Mortgage you can seek counseling from a local HUD-approved agency or a national agency.