Traditional Reverse Mortgage loans are a way for homeowners 62 or older to convert a portion of the home’s equity into tax-free cash, without having to sell or move. If a homeowner is looking to move from their current residence, a Reverse Mortgage for Purchase (HECM for Purchase) is also an option when looking to buy a new home.
These loans are available to individual and married seniors 62 and over and are commonly used to provide additional income on a fixed budget, or to enhance retirement options when planning for the future.
Here are some common questions and their answers:
Do I qualify?
- Age 62 or older
- The home you own must be your primary residence
- Qualify for enough money to payoff the mortgage balance on your primary residence if there is still an active loan
How much money can I receive?
- The older you are the more money you can receive. The calculation is based on the age of the youngest borrower
- The amount you can receive is based partly on the appraised value of your home
- The current interest rate will also be a factor in the amount of money you can receive
- Existing mortgage balance will be a factor
How do I receive the money?
- Fixed monthly payments
- Lump sum payment
- Line of credit
- A combination of the options above
Who will own my home?
- The homeowners(s) will still own the home and will always retain the title to the home; as long as you pay your property taxes, insurance and otherwise comply with the loan terms
Will a Reverse Mortgage affect my Medicare or Social Security Benefits?
- Because the funds are non-taxable, they DO NOT affect Medicare, Social Security or Pensions
I’m married. Can my spouse be on the loan?
- If both spouses are over age 62, both can be on the loan
- The amount of funds available will go according to the age of the youngest borrower
- The loan will not come due until both spouses either pass away or permanently leave the home; as long as you pay your property taxes, insurance and otherwise comply with the loan terms
What types of homes are eligible for a Reverse Mortgage?
- Single-family homes
- Detached homes
- Two-to-four unit properties that are owner-occupied
- FHA approved condominiums
- Manufactured homes that meet FHA guidelines
What are the borrowers continued responsibilities?
- Keep property taxes current
- Provide homeowners insurance for the home
- Maintain HOA fees
- Pay utilities
- General upkeep
- Use your home as your primary residence
What is the difference between a Home Equity Loan and Reverse Mortgage?
- Receive loan proceeds while having no monthly payment
- No interest payment required
- FHA insured
What else do I need know?
- The borrower(s) will live MORTGAGE PAYMENT FREE with either a traditional reverse mortgage or a Reverse Mortgage for Purchase
- The loan does not come due until the last borrower either passes away or moves out permanently; as long as you pay your property taxes, insurance and otherwise comply with the loan terms
- Borrowers can use the funds for anything they want
- All reverse mortgages are FHA insured
- Borrowers are required to attend third party counseling prior to completely the loan process
Brenda Bejarano is a Reverse Mortgage Specialist serving the Dallas, Fort Worth, Plano, Richardson, McKinney, Frisco, Hurst and Bedford areas of Texas. Click here to contact Brenda and learn if a reverse mortgage is right for you.