PRINT PAGE EMAIL FRIEND ENLARGE TYPEFACE What Is A Reverse Mortgage? How does a Reverse Mortgage work? How does the HECM compare to other home loans? Are you eligible for a Reverse Mortgage? How much cash can you receive with a Reverse Mortgage? How is it paid to you? Are there limitations on using the money? What do you pay? What do your heirs or the estate get? Is a Reverse Mortgage Right for You? Advantages Potential Disadvantages The Home Equity Conversion Mortgage (“HECM”, or “Reverse Mortgage”) was established by the Housing and Community Development Act of 1987, as part of the U.S. Department of Housing and Urban Development (HUD). Congress enacted this law in order to provide a financial system that allowed senior citizens (62 or older) to age in their homes. A HECM is a non-recourse loan against your property's value and is not required to be repaid at a predetermined date. It is open-ended. To be eligible for the HECM you must own your home and be 62 years of age or older. The loan continues (without any payment from you) as long as you: Live in the home as your primary residence. Make necessary home repairs and maintain your home.. Pay your property taxes. Pay your homeowner’s insurance. The HECM is actually a loan in reverse. The lender or bank pays you, enabling you to turn part of the equity in your property into cash. The cash you get from a reverse mortgage can be paid to you in several ways: all at once, in a single, lump sum of cash as a regular monthly cash advance as a “credit line” account that lets you decide when and how much of your available cash is paid to you as a combination of these payment methods. You or your estate will pay the money back plus interest, when you or the last surviving homeowner permanently moves out of your home. In addition to using a reverse mortgage on your current home, you now also have the option of using a reverse mortgage to finance the purchase of a new home. With a reverse mortgage, you always retain title and own your home. The bank or lender does not own your property. You continue to own and hold title to your home. In many cases, you can get a reverse mortgage even if there is currently a mortgage on the property. There is no income or credit criteria, as there is when refinancing a home mortgage, or taking out home equity line of credit. When the loan becomes due, the maximum amount that you will owe is the current market value of the house at that time. If the amount advanced, plus accrued interest, is less than that value, then that is all you will pay. Even if the money you have received exceeds the value of your home, the insurance from the Federal Housing Administration (FHA) protects you from paying more than the current market value of the home. You pay an upfront insurance premium at the closing which purchases the FHA insurance. This insurance premium is called the Mortgage Insurance Premium (MIP). This makes the loan a non-recourse loan. [ TOP ] [ PRIVACY POLICY ]     [ TERMS OF USE ]