Reverse Mortgage Facts
- You must be at least 62 years of age, or older, to receive a reverse mortgage.
- The bank pays you!!! You are not required to make any monthly mortgage payments with a reverse mortgage. A reverse mortgage is a powerful planning tool that enables seniors to stay in their home and maintain or improve their standard of living without taking on a monthly mortgage payment.
- The most widely available reverse mortgage in the United States is the federally-insured Home Equity Conversion Mortgage (HECM), which was authorized in 1987.
- A reverse mortgage is different from a regular home equity loan or line of credit, which many banks and thrifts offer. With a regular home equity loan or line of credit, you must meet certain income and credit requirements to qualify, begin monthly repayments immediately, and the home can have an existing first mortgage on it. With a Reverse Mortgage, these requirements are not necessary.
- Borrowers have a choice of receiving the proceeds from a reverse mortgage in the form of a lump-sum payment, fixed monthly payments for life, or line of credit - or a combination of any of these options.
- The size of reverse mortgage that a senior homeowner can receive depends on the type of reverse mortgage, the borrower's age and current interest rates, and the home's property value. The older the applicant is, the larger the monthly payments or line of credit.
- There are NO income or credit requirements to qualify for a reverse mortgage.
- Unlike a regular mortgage or home equity loan, a reverse mortgage doesn't require monthly repayments by the borrower to the lender. A reverse mortgage isn't repayable until the borrower no longer occupies the home as his or her principal residence.
- The repayment obligation for a reverse mortgage is equal to the principal balance of the loan, accrued interest, plus any finance charges paid for through the mortgage. BUT - you can never owe more than what you home is worth. A Reverse Mortgage is a non-recourse loan.
- A borrower cannot be forced to sell their home to repay a reverse mortgage as long as they occupy the home, even if the total of the monthly payments to the borrower exceeds the value of the home. The borrower must continue to maintain homeowners insurance and pay their property taxes.
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