Reverse Mortgage loan
What is a reverse mortgage loan?
A reverse mortgage loan is commonly known as a home equity conversion mortgage (HECM)*. It works by enabling the borrower to access equity in their property and use it to supplement retirement income.
What are the qualifications for a reverse mortgage loan?
All prospective borrowers who are interested in a reverse mortgage loan must meet with a HUD approved counselor and undergo a financial assessment to determine if a reverse mortgage loan is the right solution. There are certain qualifications for a reverse mortgage loan that need to be met in order to be eligible.
Qualifications for a reverse mortgage loan:
- You are 62 years of age or older
- You own your home and use it as your primary residence
- The house is single family, multi-family (up to 4 units) or an approved condominium or manufactured home
- You own your own home free and clear or have a small amount left to pay on the existing mortgage
- Your home is in good condition prior to taking out the loan
Requirements for a reverse mortgage loan:
During the term of your reverse mortgage loan, you will still be required to pay:
- Property taxes
- Homeowner’s insurance
- Basic home maintenance
- Homeowner’s Association (HOA) fees, if applicable
Benefits of a reverse mortgage loan
If you qualify and are able to meet the requirements, there are several reasons why homeowners choose a reverse mortgage loan:
- Eliminate monthly mortgage payments
- Access the equity you have built in your home
- Supplement retirement income
- Loan amount is based on your age, home value, and current interest rate and can be dispersed in a lump sum or line of credit
- Loan does not have to be repaid as long as you are living in the home and meeting loan terms
Let’s connect so we can help you learn how a reverse mortgage loan works and you can decide if it’s the right choice for your situation.
At the end of the reverse loan term, some or all of the property’s equity won’t belong to the borrower, and they may need to sell or transfer the property to repay the proceeds of the reverse mortgage. Guild will add the applicable reverse mortgage origination fee, mortgage insurance premium, closing costs, or servicing fees to the balance of the loan which will grow, along with the interest, over time. Interest isn’t tax deductible until all or part of the loan is repaid. Failing to pay property taxes, insurance, and maintenance might subject the property to a tax lien, foreclosure, or other encumbrance since the borrower retains the title.
*Fixed-rate and adjustable-rate reverse mortgages are insured by the FHA. Fixed-rate loans are distributed in a single lump sum with no future draws. Adjustable-rate reverse mortgages offer five payment options and allow for future draws. The age of the youngest borrower determines the amount of funds that can be received with a reverse mortgage loan. The amount of funds that can be received during the first 12-month disbursement period is subject to an initial disbursement limit.
These materials are not from HUD or FHA and were not approved by HUD or a government agency.
All loans subject to underwriter approval; terms and conditions may apply. Subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.