Reverse Mortgage Information

Download the Reverse Mortgage Guide (pdf)

FAQs | Info | Loan Process | Counseling | Glossary | HECM 'At-A-Glance'

Reverse Mortgage Definition

A reverse mortgage is a home equity loan or mortgage designed for older homeowners. With a reverse mortgage, the lender pays the homeowner either a lump sum, monthly payments or a line of credit to access money over time. Since it is a loan, it must be paid back, but not until the end, after the owners leave the home permanently or sell the property. There are no monthly payments required from the borrower during the time they remain in their home.

Interest is charged on the reverse mortgage loan balance and added to the balance (compounding) and the debt balance continues to increase. In essence, you are using your equity now, while you enjoy your home and there will be less in the future for you or your heirs, although home value appreciation offsets the rising loan balance.

Find out if you qualify for a Reverse Mortgage

Qualifying for a reverse mortgage is easy provided you and any co-borrower:

• are both at least 62 years old
• are living in the home as primary residence
• have balances on any existing mortgages no higher than funds available through reverse mortgage. Find out if your mortgage is too high for a reverse mortgage
  

Note: income and credit are not a factor because payments aren’t required and the lender is not interested in your ability to make payments (i.e. good credit history)

If you apply for a Home Equity Conversion Mortgage (backed by the federal government) you must receive reverse mortgage counseling prior to starting the loan process. See our Reverse Mortgage Counseling page.

Federally Insured Government Reverse Mortgages

Federally backed reverse mortgages are known as Home Equity Conversion Mortgages or HECM. These mortgages have mortgage insurance through the FHA, and guarantees you continue to have access to your funds if the lender goes out of business. The FHA insured HECM also has the benefit of protecting you and your heirs if the loan balance exceeds your home’s value. The home stands for the debt and you would not be required to go out of pocket if there is a deficiency.

The HECM has a maximum claim amount of $625,500 so a higher valued home would cap at that amount. Private jumbo reverse mortgages and equity release programs are very limited since the crisis in the credit markets hit in early 2007.