HECM Reverse Mortgages

A Reverse Mortgage is a Home Equity Conversion Mortgage "Loan" (HECM) insured by HUD. Specifically geared for homeowners 62 years of age and older, it allows you to convert the equity in your home into cash. Unlike traditional home equity loans that are required to be paid back, the borrower does not have to make monthly payments! Thats right! The borrower does not have to make a monthly payment with a reverse mortgage loan. If you choose to make a payment, there will never be a penalty assessed.

In many cases the lender will actually disburse tax free funds or tax free payments to the borrower. With a reverse mortgage the payment stream has been changed, it has been reversed.

The borrower will remain on title until a maturity event has occurred and no monthly payment is required with a reverse mortgage loan.

Homeowners Maintain Title

Borrowers maintain title and may remain in the home indefinitely, even if the loan balance becomes greater than the value of the home – as long as the borrower meet the loan obligations. Generally speaking, as long as at least one homeowner lives in the home as their primary residence, continues to pay required property taxes and homeowners insurance and maintains the home in accordance with FHA requirements, a reverse mortgage loan will not become due.

Qualifications: 

• The borrower must be 62 years of age or older. The benefit amount or eligible Principal Limit is based on the age of the youngest borrower, in addition to the value of the home.
• Must reside in home.
• Home must be: Single-family homes, Two- to four-unit owner occupied, FHA - approved condominiums and manufactured homes are all eligible.
• Attend Counseling Session
• Borrower(s) must pay their property taxes, insurance, any HOA fees & maintain the home.
• Pass a Financial Assessment.

The loan generally does not have to be repaid until the surviving homeowner permanently moves out of the property or pass-away.

Maturity Events:

• Sell Home
• Reside outside the home for 12 consecutive months.
• Failing to pay property charges. 
• Convey Title
• Death of borrower.

It is at this time the Heirs have a decision to make and the responsibility falls upon them.

Heirs: What Heirs & Family Must Know

• Can keep the house - Pay loan amount owed or 95% of the current home value, whichever is less.

• Can Sell the home - 6 months to do so with max two 90-day extension. 

• Loan is paid within 12 months.

• If heirs find themselves inheriting an "upside down home", they are not obligated for any shortfall on the loan and we suggest you immediately contact the lender.

One of the great advantages of a reverse mortgage is that you are not required to pay the loan back until the home is no longer your primary residence. Another great feature of a reverse mortgage is you can never owe more than the value of your home. No matter what. Reverse mortgage lenders do not want your home.

If you are age 62 or older and own your home you might be eligible for a reverse mortgage. Contact us to find out more about reverse mortgages and ways to make it work for you, or apply now and start the process of tapping the equity in your home.

Check out these pages for more information about reverse mortgages.