Is a Reverse Mortgage/
Home Equity Conversion Mortgage
(HECM) right for you?
What Is A Reverse Mortgage?
A Reverse Mortgage, or Home Equity Conversion Mortgage (HECM), is a special type of home loan that enables homeowners 62 & older to convert some of their home equity into tax-free cash, without having to take out a second mortgage or sell their home. You choose how you want to receive your Reverse Mortgage Loan funds, whether as monthly payments, cash at closing, a line of credit or a combination of these. The concept of a reverse mortgage originated in the mid 1960’s. In 1989, recognizing the incredible financial benefits this program offered, HUD was asked to take control of the program, eliminate some of the risks and insure these loans.
Your Biggest Investment, is now your Best Reward!
- Federally insured by the Federal Housing Administration (FHA)
- You do not give up title to your home
- Home can pass to your heirs
- You make no monthly mortgage payments as long as you occupy your home as your primary residence, maintain your property, and remain current on the property taxes, homeowner’s insurance and HOA dues
- No prepayment penalties
- There is no time limit to how long the homeowner(s) may remain in the property. As long as one or both homeowners remain in the home as the primary residence and remain current on the property taxes, homeowner’s insurance and HOA dues, neither you nor your spouse will be required to leave or sell the home.
- Your home does not need to be free and clear. Elimination of the current mortgage is one of the most common reasons older homeowners apply for a reverse mortgage.
- You, or your heirs, retain 100% of the remaining equity upon the sale of the home
- 62 years of age or older
- Home must be your primary residence. A reverse mortgage cannot be used for a second home or investment property.
- Eligible properties include: Single Family Homes; Two-to-Four-unit homes as long as one unit is occupied by the borrower; FHA approved Condominiums that meet the U.S. Department of Housing and Urban Development’s FHA approval requirements
- As the homeowner, your loan obligations require you to maintain the home and remain current on your homeowner’s insurance, property taxes and applicable HOA dues. During the loan process, FHA requires a financial assessment to determine homeowners’ willingness and capability to remain current on these loan obligations and ensure they qualify. During this assessment, we will review your credit history, analyze your income and compare it with your expenses. Potential borrowers who come up short financially may be able to set money aside from their reverse mortgage to cover those future expenses.
- The home maintenance must be up to date. During the reverse mortgage loan process, your home will be appraised. During this process, the appraiser will note any deficiencies in the condition of your home that require repair. Appraisers will look for and note any deficiencies, such as: peeling paint, roofing problems, inoperable heating/air-conditioning systems, broken windows, missing handrails, and inadequate electrical systems. Any repairs deemed a health and safety issue will need to be completed prior to closing. While any minor repairs, not considered health or safety issues, can be completed after closing. In these instances, the lender will allow for a repair set-aside to help pay for the cost of repairs after closing. A portion of your loan proceeds will be held to cover these costs, and when completed, any remaining funds will be returned to you.