Background:
A special loan for homeowners who are age 62 or older, reverse mortgages were first established by the Housing and Community Development Act of 1987, as part of the U.S. Department of Housing and Urban Development (HUD).
Basics:
A reverse mortgage is a loan borrowed against your property's value and does not have to be repaid at a predetermined date. The loan continues (without any payment from you) as long as you:
- Live in the home as your primary residence.
- Make necessary home repairs.
- Pay your property taxes.
In short, it's a loan in reverse, where the lender or bank pays you, enabling you to turn the value of your property (single family home, condos and manufactured homes , etc.) into cash. You or your estate will pay the money back plus interest when you permanently move out of your home.
Important notes and FAQ's
- You always retain title and own your home. The bank or lender does not own your property. You continue to own and hold title to your home.
- You don't have to have your home paid off to qualify. There are no income or credit criteria, like there are with refinancing a home mortgage, or taking out home equity lines.
- When you move out of your house, the maximum amount that you will owe is the current market value of the house. If the amount advanced plus accrued interest is less than that value, then that is all you will pay. The last step in our reverse mortgage calculator will show you how much will accrue. You can also adjust home appreciation rates in the calculator to reflect trends in your part of the country. Even if the money you have received has exceeded the value of your home, the insurance premium protects you from paying more than the current market value of the home. This protection is guaranteed by the Federal Housing Administration (FHA) and paid by you and other reverse mortgage borrowers.
Loan Amount:
Your cash amounts will be determined by the following factors:
- The appraised value of your home - or the maximum lending limit. Since you are borrowing against the property, your home's appraisal is a critical part of the process.
- Your age: a higher age will allow you to access a higher loan amount.
- The current interest rate, and whether you select a monthly or annual rate feature.
- The federally insured home equity conversion loans offered through HUD will have a lower lending limit than those offered by private reverse mortgage lenders. Talk to our approved reverse mortgage specialists. 888-600-7773.
How you get your money:
Reverse mortgages enable you to turn the value of your home into cash to fund your retirement. reverse mortgages can be custom tailored to your needs. Our reverse mortgage Cash Calculator allows you to do that in the privacy of your own home without the hassle and intrusion of meeting in person with a broker, before you're really ready.
You can take cash out of your property:
- In a single lump sum upfront amount.
- As a regular monthly cash advance.
- Held in reserve as a credit line account that lets you customize when and how much is paid to you - changing over time as your needs change.
- As a combination of these three payment methods.
Costs:
All mortgages have costs, but since the lender makes payments to you, the cost structure of a reverse mortgage is slightly different than with a forward mortgage. However, the cost categories are the same: interest rate, closing costs (similar to forward mortgages), and lender servicing costs.
