A Reverse Mortgage is a Home Equity Conversion Mortgage Loan (HECM) insured by HUD. Specifically geared for homeowners 62 years of age and older, it allows you to convert part of the equity in your home into cash. Unlike traditional home equity loans that are required to be paid back, the borrower does not have to make monthly payments! Thats right! The borrower does not have to make a monthly payment with a reverse mortgage loan. If you choosed to make a payment, there will never be a penalty assessed.
In many cases the lender will actually disburse tax free funds or tax free payments to the borrower. With a reverse mortgage the payment stream has been changed, it has been reversed.
The borrower will remain on title until a maturity event has occured and no monthly payment is required with a reverse mortgage loan.
Borrowers maintain title and may remain in the home indefinitely, even if the loan balance becomes greater than the value of the home – as long as the borrower meet the loan obligations. Generally speaking, as long as at least one homeowner lives in the home as their primary residence, continues to pay required property taxes and homeowners insurance and maintains the home in accordance with FHA requirements, a reverse mortgage loan will not become due.
The loan generally does not have to be repaid until the surviving homeowner permanently moves out of the property or passaway.
It is at this time the Heirs have a decision to make and the responsibility falls upon them.
One of the great advantages of a reverse mortgage is that you are not required to pay the loan back until the home is no longer your primary residence. For more information on when a reverse mortgage comes due click here. Another great feature of a reverse mortgage is you can never owe more than the value of your home. No matter what.
If you are age 62 or older and own your home you might be eligible for a reverse mortgage. Contact us to find out more about reverse mortgages and ways to make it work for you, or apply now and start the process of tapping the equity in your home.
Check out these pages for more information about reverse mortgages.