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Reverse Mortgages
Are becoming popular, and it's a safe plan that can give Senior citizens
greater financial security.
What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity
in his or her home into cash. The equity built up over years of home mortgage payments can be
paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required
until the borrower(s) no longer use the home as their principal residence. HUD's reverse mortgage
provides these benefits, and it is federally-insured as well.
Can I qualify for a HUD reverse mortgage?
To be eligible for a HUD reverse mortgage, HUD's Federal Housing Administration (FHA) requires that the
borrower is a homeowner, 62 years of age or older; own your home outright, or have a low mortgage
balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home.
You are further required to receive consumer information from HUD-approved counseling sources prior to
obtaining the loan.
What types of homes are eligible?
Your home must be a single family dwelling or a two-to-four unit property that you own and occupy.
Townhouses, detached homes, units in condominiums and some manufactured homes are eligible.
Can the lender take my home away if I outlive the loan?
No! You do not need to repay the loan as long as you or one of the borrowers continues to live in the
house and keeps the taxes and insurance current. You can never owe more than your home's value.
Will I still have an estate that I can leave to my heirs?
When you sell your home or no longer use it for your primary residence, you or your estate will repay
the cash you received from the reverse mortgage, plus interest and other fees, to the lender.
The remaining equity in your home, if any, belongs to you or to your heirs. None of your other assets will be
affected by HUD's reverse mortgage loan. This debt will never be passed along to the estate or heirs.
How much money can I get from my home?
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your
home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is,
the older you are, the lower the interest, the more you can borrow.
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