Learn About Reverse Mortgages

What is a Reverse Mortgage?

A reverse mortgage is a home-loan program for homeowners at least 62 years of age. It allows borrowers to access the equity they have built up in their homes. It does not require a monthly payment on the principal or interest.

With a reverse mortgage, the lender makes payments to the borrower

Traditional mortgage loans are very straightforward:

  • You qualify for a loan amount based on your credit rating and income.
  • The lender calculates your monthly payment, including interest and principal, and you pay it for the next 15-30 years!

The new program is called a reverse mortgage for a reason. Instead of making monthly payments to a lender, the lender makes payments to the borrower! Reverse mortgage proceeds can be taken as a lump sum, a line of credit and/or you can choose to no longer make your monthly mortgage payment.

The way you use your home’s equity depends on YOUR life and your needs

  • Your interest may be in reducing your monthly expenses.
  • You may want to establish a line of credit to manage potential emergencies or fulfill lifelong dreams.
  • You might be interested in using a reverse mortgage to downsize and purchase a new home.
  • Perhaps you are an adult son or daughter looking for ways to help Mom and Dad.

With a reverse mortgage, there is no mandatory monthly repayment

Borrowers are not required to pay the loan back until the home is sold or vacated. Like any loan, interest will accumulate on funds that have been borrowed. If you do not plan on making periodic payments toward your reverse mortgage, the loan balance will grow.

Learn more about helping seniors thrive in retirement

The reverse mortgage program was first enacted in 1989, during the Reagan administration. Although there have been changes to the program over the years, the mission has remained the same. To help seniors thrive in retirement, with dignity, in their own homes. Let’s review some of the ways a reverse mortgage can help you!

Frequently Asked Questions

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What is a reverse mortgage?

A reverse mortgage is a federally insured product that allows for homeowners, age 62 or older, the ability to access a portion of their home equity in the form of cash. This can be in the form of a lump sum, monthly award or line of credit.

Is the HECM the same as a reverse mortgage?

That is correct! HECM is short for: Home Equity Conversion Mortgage. It is the
same program as the federally insured reverse mortgage.

Does the bank take ownership of my home?

Absolutely not! This is merely a mortgage lien*, just like any traditional
mortgage product.

Is this program only for people who are struggling financially?

Not at all. Although it helps many seniors on fixed incomes live more
comfortably, many turn to this option for additional security in retirement.

Will I be leaving my children with debt?

You do not have to! Payments can be made toward a reverse mortgage, just like
any other mortgage product. This program gives the borrower much more
flexibility regarding repayment options.

If my loan becomes more valuable than my home, how are my heirs impacted?

This is a non-recourse loan. This means the home stands alone for the debt, not
the homeowner or heirs. It is a concern some share when they do not plan on
making any payments toward the reverse mortgage loan over a vast span of
years.

Is this loan program insured by the government?

Yes. The reverse mortgage program is regulated by H.U.D. (U.S. Department of
Housing and Urban Development) and is insured by the F.H.A. (Federal Housing
Administration). These entities set the guidelines lenders must abide by.

FREE REVERSE MORTGAGE CALCULATOR

Learn how much of your equity you can tap into with our

SIMPLE, FREE, NO OBLIGATION CALCULATOR


Reducing Your Expenses?

Learn how a reverse mortgage can help reduce your expenses and enjoy retirement.

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Thinking about the Future?

A reverse mortgage can be a great way to prepare for life's uncertainties.

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Purchasing a New Home?

Buying your dream home in retirement does not have to break your bank.

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Helping Mom and Dad financially?

A reverse mortgage is a great way to keep Mom and Dad financially independent.

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