REVERSE MORTGAGES
What is a Reverse Mortgage?
Sometimes called a home equity conversion mortgage (HECM), a reverse mortgage is a special type of refinance mortgage enabling homeowners age 62 or older to tap the equity in their homes. Disbursements from a reverse mortgage may be a lump sum or, a stream of regular payments. Unlike traditional home equity loans, no repayment of the reverse mortgage is required until you no longer occupy the home as your principal residence. Disbursements may be used to supplement social security, meet unexpected medical expenses, make home improvements, and more. The equity built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until you no longer use the home as your principal residence. The homeowner must follow the obligations of the loan program and is still responsible for making all property related payments such as taxes, insurance and HOA fees.
Reverse Mortgage Eligibility:
You, and any co-borrowers, must be at least 62 years old and either own your home free and clear or have a very low mortgage balance. The home must be your principal residence and may be a single-family or 2 to 4 unit dwelling. Condominiums and Planned Unit Developments (PUDs) may be eligible if they are in FHA-approved developments. You do not need a job and your physical health does not matter. You also must accept federally mandated mortgage counseling. Unlike ordinary loans, a reverse mortgage does not require repayment as long as you live in your home. The home must be maintained in good condition as your primary residence. All property fees, taxes and insurance must be paid as these are not escrowed like a traditional mortgage. Principal, plus interest is recovered when the home is sold. Any remaining value of the home goes to you or your survivors.
Loan Limits
The maximum amount of a reverse mortgage varies by geographic area and changes frequently. Please contact us for the maximum mortgage amount for your area. Cash Disbursements There are five options you can choose from for receiving cash disbursements. You are not limited to a single option. As your needs change, you may change from among the following reverse mortgage disbursement options: Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence. Term – equal monthly payments for a fixed period of months selected. Line of Credit – unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted. Modified Tenure – combination of line of credit with monthly payments for as long as you remain in the home. Modified Term – combination of line of credit with monthly payments for a fixed period of months selected by you. Remember that repayment of a reverse mortgage does not begin until you no longer occupy your home as your principal residence. While you occupy your home, you will be responsible for making insurance and property tax payments but payments on the reverse mortgage do not begin until you no longer occupy your home.