Reverse Mortgage Fact Sheet
Reverse mortgages permit homeowners aged 62 and older to convert home equity into cash.
The programs have been designed with features and benefits that make them a particularly safe and attractive way for senior homeowners to provide for their financial needs. Here is a basic overview.
Eligibility: You must be 62 and older, and own your home. Most reverse mortgage programs require that the mortgaged property be your primary residence.
Property Ownership: You will continue to own your home, just as you would with a traditional mortgage. You do not share equity or appreciation with the lender.
Qualification: Unlike with traditional mortgages, income, assets and credit scores are not used to determine whether you qualify for a reverse mortgage. The factors that do matter are your age, home value and location, and current interest rates.
Counseling: All reverse mortgage applicants are provided with a counseling session from an independent, non-profit agency approved by the Department of Housing and Urban Development (HUD), to ensure that the loan is appropriate for their circumstances.
Loan Proceeds: There are different options for obtaining the funds from a reverse mortgage. You can receive the entire amount for which you are eligible as a lump sum, or you may prefer to have a line of credit, or guaranteed monthly payment to you – or a combination of these. (Note: not all options are available on all programs).
Repayment: No repayment is required as long as you continue to live in your home. Interest accrues on the loan balance, which will increase over time. Once you no longer reside there, the full amount of the balance becomes due and payable.
No recourse to the borrower: If you or your heirs repay the loan through the sale of the property, you are guaranteed not to have to repay more than the net sale proceeds – even if the sale proceeds are less than the loan balance.
Most reverse mortgages are insured by the Federal Housing Administration (FHA).
