Reverse Mortgage
The loan that pays you. A Reverse Mortgage enables you to withdraw some of the equity in your home to use however you wish. You choose how you want to withdraw your funds, whether in one lump sum, a fixed monthly amount, line of credit, or a combination of those options.
You can also use a Reverse Mortgage to purchase a primary residence if you are able to use cash on hand to pay the difference between the Reverse Mortgage proceeds and the sales price plus closing costs for the property you are purchasing.
Counseling is required before obtaining a Reverse Mortgage. Counselors will discuss program eligibility requirements, financial implications and alternatives to obtaining a Reverse Mortgage. They will also discuss provisions for the mortgage becoming due and payable. Counseling can be done via telephone by contacting AARP: 1-888-OUR-AARP (1-888-687-2277).
Do I qualify?
Borrowers Must Be: 62 years of age or older; own the property outright or have a small mortgage balance; occupy the property as your principal residence.
Mortgage Amount Based On: age of the youngest borrower; current interest rate; lesser of appraised value or the Reverse Mortgage FHA mortgage limit.
Financial Requirements: no income or credit qualifications are required of the borrower: no repayment as long as the property is your principal residence; closing costs may be financed in the mortgage.
The following eligible property types must meet all FHA property standards and flood requirements: single family home or 1-4 unit home with one unit occupied by the borrower; HUD-approved condominium; manufactured home that meets FHA requirements.
How the program works:
- Lump Sum
- 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 in installments, at times and in an amount of your choosing until the line of credit is exhausted.
- Modified Tenure - combination of line of credit plus scheduled monthly payments for as long as you remain in the home.
- Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
Repaying a Reverse Mortgage
A Reverse Mortgage loan must be repaid in full when you pass away or sell the home. The loan also becomes due and payable if:
- You do not pay property taxes or hazard insurance or violate other obligations.
- You permanently move to a new principal residence.
- You, or the last borrower, fail to live in the home for 12 months in a row, such as a 12-month or longer stay in a nursing home.
- You allow the property to deteriorate and do not make necessary repairs.
If you decide to sell your home or pay off the reverse mortgage, any remaining equity stays with you.