A reverse mortgage is a low-interest loan for homeowners 62 years of age or older that use a home’s equity as collateral. The loan amount is a percentage of the home’s value determined by the age of the youngest homeowner. The loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 12 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not liable if the home sells for less than the balance of the reverse mortgage loan. Reverse mortgage loans are insured by the U. S. Government.
You must be 62 years of age or older and own your home. There are certain requirements as far as the amount of equity you must have. Your property does not have to be debt free. Consult with a loan officer to discuss the amount of equity that is required. It will differ depending on the age of the homeowner.
Single family residences, qualified condominiums, townhouses, mobile homes, manufactured homes, and duplexes are eligible. The property must be your main residence.
Yes, the funds that you receive from a reverse mortgage are tax free and are not considered income. You may use the proceeds for almost anything you wish.
You retain title to your property with a reverse mortgage loan. You may sell your property at any time. You cannot lose your home under normal circumstances, however, please understand foreclosure may occur if you do not pay your taxes and insurance and otherwise comply with the loan terms.
There are no mortgage payment requirements. However you are responsible to stay current on your homeowners insurance and property taxes. You may payoff the reverse mortgage loan at any time with no prepayment penalties.
The reverse mortgage loan is due when you sell, permanently move out of the property, the last surviving borrower passes away, or eligible non-borrowing spouse leaves the property.
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits ($625,500) for your area, whichever is less. Generally, the more valuable your home is, the older you are and the lower the interest rate, the more money you receive.
There are almost no restrictions on how you use the money from your reverse mortgage. Common uses are for home repairs or improvements, medical expenses, monthly bills, property taxes, payoff current mortgage.
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These materials are not from HUD or FHA and were not approved by HUD or a government agency.