Reverse Mortgages Explained

What if there were no payments due on your home equity loan unless or until you sold or moved out of your home (even if it meant not having to make any payments for the rest of your life)?

What if you could receive regular monthly advances from that same home equity loan for the rest of your life with no limit on the amount you receive (even if the amount you receive eventually exceeded the value of your home)?

What if any amounts that eventually exceeded the value of your home were covered by FHA insurance or a Fannie Mae or lender guarantee, so that you could in effect receive but never have to pay back the excess amount?

What you’d have is a reverse mortgage; a loan that offers advances for life but requires no payments for life (so long as you live in your home), where the amount borrowed can exceed the value of your home but the loan payoff cannot (due to FHA insurance or a Fannie Mae or lender guarantee), where there are no payments to miss because there are no payments to make. The perfect loan for seniors.

With no payments to make there are no income requirements or limitations, so any homeowner age 62 or older can qualify. Typical mortgage costs such as title insurance, appraisal, origination fee and mortgage insurance can be included in the reverse mortgage balance, so there is no cash required at closing.

A reverse mortgage is a source of additional tax free income that can be used to pay the costs of maintaining a home, to pay bills and taxes or to pay off an existing mortgage, to pay for insurance, take a trip, buy a boat or visit the grandchildren, all without any obligation to make monthly payments.

In addition to the option of receiving monthly payments for life a reverse mortgage can also be funded as a lump sum, as a line of credit, or as monthly payments for a fixed term.

As a consumer protection, Federal law requires counseling with an independent third party counselor before applying for an FHA reverse mortgage loan.