What is a reverse mortgage loan and how does it work?
A reverse mortgage 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.
Who is eligible for a reverse mortgage loan?
All prospective borrowers must meet with a HUD approved counselor and undergo a financial assessment to determine if a reverse mortgage loan is the right solution. You may be eligible for a reverse mortgage loan if:
- 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
Benefits of a reverse mortgage loan
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
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
*These are brokered loan products.