Reverse Mortgage

Reverse MortgageA Reverse Mortgage is a loan for senior home owners 62 and above that uses the home’s equity as collateral.  To be eligible for an HECM Reverse Mortgage, the home must be owned free and clear or all existing liens must be satisfied with the proceeds of the Reverse Mortgage.

Generally, the loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away as long as the loan terms are met, i.e. taxes are paid, home is adequately insured and maintained.  At such time, the estate has 6 months to repay or sell the home to pay off the balance.  If the estate sells for less than the balance of the reverse mortgage owed, the estate is not liable for the difference.  The lender must take a loss and request reimbursement from the FHA (Federal Housing Administration).  Other investments, cars and valuable possessions cannot be taken from the estate to pay off the reverse mortgage.  If the estate sells for more than the balance owed, the remaining equity is inherited by the estate.

The loan limit for HECM (Home Equity Conversion Mortgage) Reverse Mortgage depends on several factors:

  1. Age (Must be 62 or older)
  2. Appraised value of the home
  3. Government imposed lending limits
  4. Current Interest Rate

Options for Distribution of funds form a Reverse Mortgage:

  1. Lump Sum – Lump sum of cash at closing
  2. Tenure – Equal monthly payments for as long as the homeowner lives in the home
  3. Term – Equal monthly payments for a fixed number of years
  4. Line of credit – Draw any amount until the funds exhausted
  5. Any combination of the above

For a complimentary, personalized evaluation, call our office at 512-740-0807.