Reverse Mortgages:  Information

What Is a Reverse Mortgage?

• Youngest homeowner must be 62 years or older.
• The loan converts a portion of home equity into tax-free cash.
• Ownership remains with the borrower.
• No payment ever required as long as you (or spouse) live in home.
• No income requirement; very little credit qualification required.
• Most reverse mortgages (90%) are the Home Equity Conversion Mortgage (HECM). This loan is insured and regulated by the Federal Housing Administation (FHA).

How does a Reverse Mortgage work?

• Maximum amount available based on strictly regulated FHA formula: borrower's age; current home market value; amount of equity in home; and current interest rates determine amount available.
• Funds can be accessed in several ways: Fixed monthly payment: Lender sends YOU a monthly check Lump sum; line of credit; or a combination of any of these options.
• Pay nothing as long as the Reverse Mortgage is outstanding.
• No impact on Social Security, Medicare, pensions, other investments. 

When is a Reverse Mortgage repaid?

• Nothing owed until permanent move out or (one year +) change of primary residence or death of surviving spouse.
• You cannot be forced out of your home. It's Your Home For Life.
• Amount repaid: Principal:amount taken out over course of loan. Accrued interest. Insurance, origination and service fees.
• Non-Recourse. Even if you have received and owe more than the house's value at time of sale you are never required to repay more than the house is worth.

How can Reverse Mortgage proceeds be used?

• Use proceeds without restrictions.
• Make home repairs, home renovations, pay property taxes.
• Cover medical expenses or prescription drug costs.
• Meet regular day-to-day living expenses.
• Take vacations, travel, make special purchases.

HUD requires each borrower of a HECM to receive free, independent counseling prior to applying:

• Counseling may be face-to-face or by phone and generally takes about 45 minutes. Seniors must arrange the counseling themselves.
• Counselors must have approval from HUD. Many have been trained by AARP.
• We will provide a list of no fewer than 5 HUD-approved counselors located in the borrower's local area.
• Three entities have special permission to counsel seniors nationally about reverse mortgages over the phone: The AARP Foundation Network 1-800-209-8085; National Foundation of Credit Counselors 1-866-698-6322; Money Management International 1-877-908-2227
• We, the lender, will not communicate with the counselor about your personal situation. Counselors will assure that you know about other options and understand the financial ramifications of a HECM.
• We may explain reverse mortgages, show you copies of closing documents, and begin the preliminary application prior to completion of the counseling but we may not complete your application until counseling is completed.
• You and the counseling agency must both sign a certificate of completion before we can complete your application.
• All borrowers must complete the counseling, meaning all parties on the title to the home. Counseling may be conducted separately or jointly when there are multiple borrowers.
• Counseling certificates are valid for 180 days, after which counseling must be repeated if the application is not completed by then.

You have worked for years, taking care of your house.

Now, let your house take care of you.