Frequently Asked Questions

What is a Reverse Mortgage?

A Reverse Mortgage is a federally insured loan that allows homeowners age 62 and older to use a portion of their home value without creating a monthly payment. Best of all, you maintain ownership. The money received from the Reverse Mortgage is tax-free.

By letting your home pay you back, the value you convert to cash opens new opportunities. In addition, you will NEVER be forced to leave the security of your home, or make a payment as long as you live in your home.

Simply Put: A Reverse Mortgage is the only safe way to access a portion of the value in your home without ever having to make a monthly payment.

How Does A Reverse Mortgage Work?

The FHA–Insured Reverse Mortgage is also known as a HECM (Home Equity Conversion Mortgage). This program allows homeowners to borrow against a portion of their home’s value. Unlike traditional mortgages, you do not create a monthly payment.

The amount available to a homeowner using a Reverse Mortgage is based on: the age of the youngest homeowner, the appraised value of the property, and the current interest rates.

How is a Reverse Mortgage repaid?

The loan becomes due when you no longer live in the property. You or your estate may pay back the loan by either selling the property, or refinancing the mortgage.

Because a Reverse Mortgage requires no monthly payments, this allows your estate a one year period to either sell the home or to refinance the loan when the loan becomes due.

For Example: Let’s assume someone takes out a Reverse Mortgage and owes $50,000 after 5 years. Then, the homeowner passes away and the estate sells the house for $250,000. The lender gets $50,000 and the estate inherits $200,000.

Can I get a Reverse Mortgage if I have a current mortgage?

Yes, we have a number of clients that use the Reverse Mortgage to pay off their current mortgage.
Reverse Mortgages are designed to eliminate the burden of making monthly mortgage payments.
This creates positive cash flow.
Reverse Mortgages protect the borrower from foreclosure due to non- payment, because there are no payments required.

How do I qualify?

To qualify for a Reverse Mortgage, you must:
Be at least 62 years old,
Occupy the property as your primary residence,
Pay off any existing mortgages at the time of settlement, and
Attend a HUD-approved housing counseling session.

How can I use the money?

You can use the money for any reason!
Some of the most common uses include:
Paying off an existing mortgage or other debt
Doing home improvements
Purchasing long-term health care or paying for in-home care
Supplementing income, helping family members, traveling

How much money do I qualify for?

The amount of money you receive depends on three factors:
your age
the appraised value of your home
the current interest rates
Frequently Asked Questions October 12, 2015


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