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What is a Reverse Mortgage?
A Reverse Mortgage is a special type of home loan that lets a
homeowner convert the equity in his or her home into cash. The equity
built up over years of home mortgage payments can be paid to the
homeowner: in a lump sum, in a stream of payments, or as a supplement to
Social Security or other retirement funds. But unlike a traditional home
equity loan or second mortgage, no repayment is required until the
borrowers no longer use the home as their principal residence. HUD's
Reverse Mortgage provides these benefits, and it is federally-insured as
well.
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Can I qualify for a HUD Reverse Mortgage?
To be eligible for a HUD Reverse Mortgage, HUD's Federal Housing
Administration requires that you are a homeowner 62 years of age or
older; have a very low outstanding mortgage balance or own your home
free and clear; and that you meet with a HUD-approved counseling agency
-- to make sure you understand what a HUD Reverse Mortgage will mean for
you.
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Can I apply if I didn't buy my present house with FHA mortgage
insurance?
Yes. While your property must meet FHA minimum standards, it doesn't
matter if you didn't buy it with an FHA-insured mortgage. Your new HUD
Reverse Mortgage will be a new FHA-insured mortgage loan.
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What if I own a condominium, not a single-family home?
You can still qualify for HUD's Reverse Mortgage program. An
eligible property must be your principal residence, but can be a
single-family residence; a one- to four-unit dwelling with one unit
occupied by the borrower; a manufactured home (mobile home); a unit in
FHA-approved condominiums; and Planned Unit Developments. Your property
must meet FHA minimum property standards, but you can fund repairs from
your Reverse Mortgage.
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What's the difference between a Reverse Mortgage and a bank home
equity loan?
With a traditional second mortgage, or a home equity line of credit,
you must have sufficient income to qualify for the loan, and you are
required to make monthly mortgage payments. A Reverse Mortgage works
very differently. The Reverse Mortgage pays you, and it is available
regardless of your current income. You don't make payments, because the
loan is not due as long as the house is your principal residence. Like
all homeowners, you still are required to pay your real estate taxes and
other conventional payments like utilities, but with an FHA-insured HUD
Reverse Mortgage, you cannot be foreclosed or forced to vacate your
house because you "missed your mortgage payment."
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Can the lender take my home away if I outlive the loan?
No! The loan does not become due until your home is sold, is no
longer your primary residence or until you die. You cannot be forced to
sell your home to pay off the mortgage loan even if the loan balance
grows to exceed the value of the property And, HUD's Federal Housing
Administration guarantees that you'll receive all the payments that are
owed to you.
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Will I still have an estate that I can leave to my heirs?
When you sell your home or no longer use it for your primary
residence, you or your estate will repay the cash you received from the
Reverse Mortgage, plus interest and other finance charges, to the
lender. All proceeds beyond what you owe belong to you or your estate.
This means the remaining equity in your home can be passed on to your
heirs. None of your other assets will be affected by HUD's Reverse
Mortgage loan. No debt will ever be passed along to the estate or heirs.
You retain ownership of your home, and may sell or move at any time.
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The
NRMLA Consumer Guide to Reverse Mortgages
NRMLA's first
consumer guide to help educate senior's about reverse mortgages.
Using Reverse Mortgages for Health Care: A NRMLA Guide for Consumers
This guide helps explain how reverse mortgages
can be used to help pay for your health care needs and preserve your
financial security.
Just the FAQs: Answers to Common Questions About Reverse Mortgages
This guide lists the most common questions asked by consumers about reverse mortgages—with the answers from the National Reverse Mortgage Lenders Association. The questions are broken into three groups: those appropriate to ask before getting a reverse mortgage; those applicable during a reverse mortgage; and those applicable at the end of a reverse mortgage.
FannieMae's Money From Home
A detailed guide to understanding reverse mortgages.
AARP's "Home Made Money"
A Consumer's Guide to Reverse Mortgages"
Considering a Reverse Mortgage?
Review these 5
steps to see if a Reverse Mortgage is right for you. |
