What is a reverse mortgage and how does it work?
A reverse mortgage is a loan that enables homeowners 62 years of age and older to tap into some of the equity they have accumulated in their home and convert it into tax-free cash. A Home Equity Conversion Mortgage (HECM) is safe and secure because it is insured by the federal government through the U.S. Department of Housing and Urban Development (HUD/FHA). A reverse mortgage allows you to:
- Eliminate monthly mortgage payments
- Continue to own and maintain full control of your home
- Protect against owing more than the value of your home
- Keep all remaining equity
- Qualify with no income or credit restrictions
What are the benefits of a reverse mortgage?
- Eliminate your mortgage payments while paying off your existing mortgage
- Receive tax-free money by converting the equity in your home into cash
- Continue to live in your own home while maintaining ownership
- No restrictions on how you use your money
- You or your heirs keep all remaining equity after the loan is paid off
- You or your heirs will never owe more than the home is worth
- Never lose your home as long as you maintain the property and pay the property taxes and homeowner’s insurance
- No income or credit restrictions
- Does not affect Social Security or Medicare benefits
- Government insured
- No pre-payment penalty means you may repay the loan at anytime
- Flexible payment options allow you to receive your money in various ways
How do I qualify?
- All borrowers must be 62 years of age or older
- The home must be your primary residence
- There must be sufficient equity in your home
- Your home must be one of the following:
- Single-family residence
- One to four family unit dwelling
- Planned unit development
- HUD-approved condominium
- Manufactured home (some mobile homes are eligible)
- Your home must meet HUD’s minimum property condition standards (you can use the reverse mortgage to pay for necessary repairs that may be required).
- Receive counseling from a HUD-approved counseling agency. Click here to contact us for a list of approved agencies.
How do I receive my money?
You can receive your money in any of the ways listed below, or a combination of these:
- Line of Credit – to be drawn from when you want
- Lump Sum – all at once
- Tenure – guaranteed lifetime monthly payments
- Term – for a specific time period pre-determined by you
- Combination – select a combination of the above options
This blog will have additional questions and answers tomorrow. If you have questions not answered in this post call Sheila Karlowsky 223-1032.
