What is a Reverse Mortgage?
A Home Equity Conversion Mortgage (HECM) is the FHA insured loan that many commonly refer to as a ‘reverse mortgage’ loan. The Home Equity Conversion Mortgage is regulated by HUD (The Department of Housing & Urban Development). A reverse mortgage allows you to draw on the equity in your home without having to sell it. A typical “forward” mortgage is where you would pay monthly principal and interest payments, while a reverse mortgage is a loan that may allow you to receive monthly payments. The loan is repaid when you sell your home, the last borrower passes away, or you no longer live there as the principal residence. As a borrower you must continue to pay property related fees, taxes and insurance, and must maintain the home in good condition. You can use the cash payments as you wish to supplement your retirement income, make home improvements, pay bills, or vacation.
What Are the Requirements?
- Be 62 years of age or older
- Own the property outright or paid-down a considerable amount
- Occupy the property as your principal residence
- Not be delinquent on any federal debt
- Have financial resources to continue to make timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
- Participate in a consumer information session given by a HUD- approved HECM counselor
- Single family home or 2-4 unit home with one unit occupied by the borrower
- HUD-approved condominium project
- Manufactured home that meets FHA requirements
- Income, assets, monthly living expenses, and credit history will be verified.
- Timely payment of real estate taxes, hazard and flood insurance premiums will be verified
Who We Help
To become eligible for a reverse mortgage, you must be at least 62 years old and own your home. You must have equity in the house to pay off any outstanding balances, and your home must be occupied as your principal residence. Minimal income and credit standards must also be met. Imagine living in your home without a traditional monthly mortgage payment *, or instead enjoying monthly loan proceeds from the years you’ve invested in your home. A reverse mortgage is a unique mortgage designed for homeowners 62 and older. You may enjoy access to part of the equity in your home and the freedom and comfort of the home you’ve known for so many years. It’s your home, now you can put it to work for you.
If you are concerned for your aging parents or relatives as their home becomes too much to manage or too difficult to move about, reverse mortgage may be an option. It is common for adult children to look into the reverse mortgage process for their parents and help them make the right decision. Here are some common questions and concerns you may have.
Questions to ponder:
1. Do I have the financial resources to help my parents with their medical and living expenses?
2. Is there a concern from other siblings as to inheriting the home or the equity?
3. What are my parents’ wishes as to staying home if medical care is needed for an extended time?
A reverse mortgage is not for everyone. Our goal is to work with trusted financial and legal advisors to help determine if a reverse mortgage meets the needs of your client. We can accomplish this by providing detailed loan scenarios to you (with your client’s permission) and personal consultation with our staff to help reach a decision that is aligned with the interest of all parties. We are up front with all our clients about the advantages and disadvantages of a reverse mortgage.
Frequently Asked Questions
You will still own your home and can remain in it as long as you wish, provided you continue to pay the property taxes, insurance and maintain the home in good condition.
The amount you may borrower will depend on a number of factors such as:
– Age of the youngest borrower or eligible non-borrowing spouse
– Current interest rate
– and the lesser of the appraised value of your home, sales price or HECM FHA mortgage limit of $726,525
The property does not need to be debt-free to be eligible. The existing mortgage must be satisfied at closing or subordinated to the reverse mortgage.
A Reverse Mortgage doesn’t typically impact your Social Security or Medicare benefits, but benefits do vary state by state; be sure to consult a benefits professional.
The borrower can choose from among five different payment plans.
A. Tenure. The borrower may receive fixed monthly payments as long as he or she maintains the property as a principal residence.
B. Term. The borrower may receive fixed monthly payments for a term of months selected by the borrower, as long as he or she maintains the property as a principal residence.
C. Line of Credit. The borrower may elect to make withdrawals at times and in amounts of his or her choosing, as long as he or she maintains the property as a principal residence.
D. Modified Tenure. The borrower may combine a tenure payment plan (fixed monthly payments for as long as property is principal residence) with a line of credit. The borrower sets aside a portion of the principal limit as a line of credit from which to draw at times and in amounts of his or her choosing and receives the rest in equal monthly payments for as long as he or she continues to occupy the home as a principal residence.
E. Modified Term. The borrower may combine a term payment plan (fixed monthly payments for a term of months) with a line of credit. The borrower sets aside a portion of the principal limit as a line of credit from which to draw at times and in amounts of his or her choosing and receives the rest in equal monthly payments for a term of months selected by the borrower, as long as he or she maintains the property as a principal residence.
Speak to a Loan Consultant Today
I am ready to get started with my no obligation loan consultation!
Benefits of a Reverse Mortgage
A Reverse mortgage is a specialized loan for homeowners 62 and older.
A reverse mortgage allows older homeowners to access a portion of the equity in their home.
Proceeds from a reverse mortgage are not subject to personal income taxation, but borrowers should seek tax advice on how proceeds may effect government needs-based programs such as Medicaid and Medi-Cal.
It is not a government grant, but a loan that is repaid in the future when the home is sold or the last borrower dies or permanently leaves their residence.
Borrower is not obligated to make monthly mortgage payments but can if they wish.
What is a Reverse Mortgage?
A Home Equity Conversion Mortgage (HECM) is the FHA insured loan that many commonly refer to as a ‘reverse mortgage’ loan. The Home Equity Conversion Mortgage is regulated by HUD (The Department of Housing & Urban Development). A reverse mortgage allows you to draw on the equity in your home without having to sell it. A typical “forward” mortgage is where you would pay monthly principal and interest payments, while a reverse mortgage is a loan that may allow you to receive monthly payments. The loan is repaid when you sell your home, the last borrower passes away, or you no longer live there as the principal residence. As a borrower you must continue to pay property related fees, taxes and insurance, and must maintain the home in good condition. You can use the cash payments as you wish to supplement your retirement income, make home improvements, pay bills, or vacation.
What Are the Requirements?
- Be 62 years of age or older
- Own the property outright or paid-down a considerable amount
- Occupy the property as your principal residence
- Not be delinquent on any federal debt
- Have financial resources to continue to make timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
- Participate in a consumer information session given by a HUD- approved HECM counselor
- Single family home or 2-4 unit home with one unit occupied by the borrower
- HUD-approved condominium project
- Manufactured home that meets FHA requirements
- Income, assets, monthly living expenses, and credit history will be verified.
- Timely payment of real estate taxes, hazard and flood insurance premiums will be verified
Who We Help
To become eligible for a reverse mortgage, you must be at least 62 years old and own your home. You must have equity in the house to pay off any outstanding balances, and your home must be occupied as your principal residence. Minimal income and credit standards must also be met. Imagine living in your home without a traditional monthly mortgage payment *, or instead enjoying monthly loan proceeds from the years you’ve invested in your home. A reverse mortgage is a unique mortgage designed for homeowners 62 and older. You may enjoy access to part of the equity in your home and the freedom and comfort of the home you’ve known for so many years. It’s your home, now you can put it to work for you.
If you are concerned for your aging parents or relatives as their home becomes too much to manage or too difficult to move about, reverse mortgage may be an option. It is common for adult children to look into the reverse mortgage process for their parents and help them make the right decision. Here are some common questions and concerns you may have.
Questions to ponder:
1. Do I have the financial resources to help my parents with their medical and living expenses?
2. Is there a concern from other siblings as to inheriting the home or the equity?
3. What are my parents’ wishes as to staying home if medical care is needed for an extended time?
A reverse mortgage is not for everyone. Our goal is to work with trusted financial and legal advisors to help determine if a reverse mortgage meets the needs of your client. We can accomplish this by providing detailed loan scenarios to you (with your client’s permission) and personal consultation with our staff to help reach a decision that is aligned with the interest of all parties. We are up front with all our clients about the advantages and disadvantages of a reverse mortgage.
Frequently Asked Questions
You will still own your home and can remain in it as long as you wish, provided you continue to pay the property taxes, insurance and maintain the home in good condition.
The amount you may borrower will depend on a number of factors such as:
– Age of the youngest borrower or eligible non-borrowing spouse
– Current interest rate
– and the lesser of the appraised value of your home, sales price or HECM FHA mortgage limit of $726,525
The property does not need to be debt-free to be eligible. The existing mortgage must be satisfied at closing or subordinated to the reverse mortgage.
A Reverse Mortgage doesn’t typically impact your Social Security or Medicare benefits, but benefits do vary state by state; be sure to consult a benefits professional.
The Reverse Mortgage becomes due and payable when the last remaining homeowner sells the property, permanently vacates the home, passes away, or fails to adhere to loan terms.
The borrower can choose from among five different payment plans.
A. Tenure. The borrower may receive fixed monthly payments as long as he or she maintains the property as a principal residence.
B. Term. The borrower may receive fixed monthly payments for a term of months selected by the borrower, as long as he or she maintains the property as a principal residence.
C. Line of Credit. The borrower may elect to make withdrawals at times and in amounts of his or her choosing, as long as he or she maintains the property as a principal residence.
D. Modified Tenure. The borrower may combine a tenure payment plan (fixed monthly payments for as long as property is principal residence) with a line of credit. The borrower sets aside a portion of the principal limit as a line of credit from which to draw at times and in amounts of his or her choosing and receives the rest in equal monthly payments for as long as he or she continues to occupy the home as a principal residence.
E. Modified Term. The borrower may combine a term payment plan (fixed monthly payments for a term of months) with a line of credit. The borrower sets aside a portion of the principal limit as a line of credit from which to draw at times and in amounts of his or her choosing and receives the rest in equal monthly payments for a term of months selected by the borrower, as long as he or she maintains the property as a principal residence.
Speak to a Loan Consultant Today
I am ready to get started with my no obligation loan consultation!
Benefits of a Reverse Mortgage
A Reverse mortgage is a specialized loan for homeowners 62 and older.
A reverse mortgage allows older homeowners to access a portion of the equity in their home.
Proceeds from a reverse mortgage are not subject to personal income taxation, but borrowers should seek tax advice on how proceeds may effect government needs-based programs such as Medicaid and Medi-Cal.
It is not a government grant, but a loan that is repaid in the future when the home is sold or the last borrower dies or permanently leaves their residence.
Borrower is not obligated to make monthly mortgage payments but can if they wish.