FAQs
What is a Reverse Mortgage?
A Reverse Mortgage allows homeowners age 62 and older to use the equity in their home for income. There are no payments to make so long as the homeowners own and reside in the home, which could mean no payments for life. Homeowners who in prior generations may have sold their home and moved to an apartment or condo can now keep their home and enjoy extra income for life. FHA reverse mortgages are insured by the Federal Housing Administration.
Who Qualifies?
Homeowners age 62 and over. There are no income requirements or limitations or health questions.
How Much Money Can I Get?
The amount you qualify for is based on the value of your home, your age and current interest rates. The older you are, the greater the amount. If you choose a lump sum, typical amounts range from 50% to 70% of the appraised value of the home.
What Are The Special Features About a Reverse Mortgage?
A Reverse Mortgage enables you to tap the equity in your home without having to make monthly payments. The purpose of the Reverse Mortgage program is to provide you with additional cash so you can own and stay in your home for life (or for as long as you want). The funds can be used for any purpose, such as financial independence, home repair, personal expenses, insurance, buy gifts for the grandchildren, etc. You can receive monthly income (or a lump sum, line of credit, fixed term). You can receive more but can never owe more than your home is worth. Should there be an excess payoff at the time your home is sold it is covered by FHA insurance or a Fannie Mae or lender guarantee, so no debt passes to your heirs, even if your home value declines. There is nothing to repay and even interest is not due until you move out of your home or your home is sold. You receive the proceeds tax-free.
Is It Safe?
Yes. You cannot lose your home for failure to make mortgage payments, since there are no payments to make. FHA insurance guarantees that the monthly income is for life. And the loan is non-recourse, which means you can receive but can never owe more than your house is worth. Consumer protections include counseling by AARP or a FHA approved counseling agency. FHA also limits the fees that can be charged.
What Does a Reverse Mortgage Cost?
The typical Reverse Mortgage includes a loan origination fee, an FHA mortgage insurance premium, and other normal closing costs such as appraisal and title insurance. Fees are financed as part of the Reverse Mortgage, and are part of the payoff when you move or your house is sold. FHA limits the fees charged on an FHA Reverse Mortgage.
Why Doesn’t Everyone Have a Reverse Mortgage?
A Reverse Mortgage is only appropriate for seniors who want to “Age in Place,” that is, remain in their home as long as they can, possibly for the rest of their lives. The FHA program began as an experiment in 1989 and was only made a permanent program in 1998. Many who could utilize a Reverse Mortgage are not yet aware of the program. And Reverse Mortgages are an option that was simply not available to prior generations.
How Do I Go About Getting A Reverse Mortgage?
- First you learn about reverse mortgages. We will be happy to come to your home to discuss reverse mortgages with you, to calculate the amount you qualify for, to explain the different programs, and a to answer any questions you may have.
- Next, you’ll have a free counseling session with a HUD or Fannie Mae approved counselor. Counseling is a consumer protection feature of Reverse Mortgage programs. We will provide you with a list of approved counselors (such as AARP or Consumer Credit Counseling Service), or you can find a list on this website. You choose and contact the counselor. Counseling can be done over the phone.
- Once you have completed your counseling, we process your loan. Processing includes a loan application, typical mortgage loan disclosures, an appraisal and title insurance. All of these costs are financed as part of the loan.
- Finally, the loan can be closed in your home.
Where Can I Get Additional Information?
Try the following websites:
HUD/FHA
National
Reverse Mortgage Lenders Association (NRMLA)
AARP
Reverse Mortgage website
AARP
Publication “Homemade Money”
Fannie
Mae
Aging
In Place Council
Counseling
AARP
Foundation Reverse Mortgage counseling website
HUD
Reverse Mortgage Counselor Lists
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