What Is a Reverse Mortgage

Intro To Reverse Mortgages

We want you to be well-informed about the many options available on this versatile mortgage loan so that you can make the best decision for yourself and your family based on your unique circumstances.

Deciding about a reverse mortgage loan can be scary. It's a big decision and it's important to understand all of your options before you decide if this type of loan is right for you. We hope the following information will help you as you explore whether a reverse mortgage loan is right for you.

What is a Reverse Mortgage Loan?

A Reverse Mortgage Loan is a type of home equity loan that allows homeowners 62 years or older to draw on the value of their home, which is paid to the homeowner(s) in a variety of payout options or used as a line of credit. The amount of cash you can receive from a Reverse Mortgage Loan depends on your age, the value of your home, and the interest rate.

You don't have to make any payments on a Reverse Mortgage Loan as long as you live in your home. When you sell your home or no longer live in it, you or your estate will need to repay the Reverse Mortgage Loan plus any interest that has accrued. Some people use Reverse Mortgage Loans to supplement their retirement income, while others use them to pay for unexpected expenses such as medical bills or home repairs. If you're considering a Reverse Mortgage Loan, it's important to understand how they work and what their implications are for you and your heirs.

Types of Reverse Mortgage Loan Solutions

There are different types of reverse mortgage loan solutions. The most popular type is the Home Equity Conversion Mortgage (HECM) which is insured by the Federal Housing Administration (FHA). There are also proprietary reverse mortgage loans for high value homes, which are not federally insured.

Either type of reverse mortgage loans allow you to draw from the value in your home without having to sell it. You can use the money you get from a reverse mortgage to supplement your income, pay for home repairs or renovations, pay off your existing mortgage, or cover other expenses.

Reverse mortgages are complex and there are many rules and regulations around them. We are reverse mortgage loan specialists and are here to assist you as you explore your options and whether a reverse mortgage loan solution is right for you.

Who Can Qualify for a Reverse Mortgage Loan?

In order to be eligible for a reverse mortgage loan, you must meet certain requirements, such as:

At least one borrower (that will be on title) must be at least 62 years old (unless in the state of Texas, both borrowers must be 62 years old at the time the loan closes).

The borrower(s) must maintain the property as his or her primary residence for at least six months in each year.

There must be enough equity in the property. While there isn't a precise amount of equity required, it is usually suggested that you have at least 50% equity in your house since you'll have to repay your current mortgage with the loan money. The more equity you have, the more cash value you will have access to.

Underwriting standards for HECMs are less stringent than those for other types of home loans. All applicants are evaluated to assess their financial stability and inclination to fulfill loan obligations such as taxes and insurance, regardless of the type of mortgage they take out.

Keep in mind that each lender may have different qualification requirements based on multiple factors; like your financial situation, age, interest rates, home value and other factors. Also, you don't need a free and clear home to qualify for a reverse mortgage loan.