Financial Backup Plan.com
Your Reverse Mortgage Resource
WHAT IS A REVERSE MORTGAGE? (Home Equity Conversion Mortgage)
A reverse mortgage
A reverse mortgage is a loan that allows seniors who are 62 or older to access to the equity in you home by converting a portion of the value into cash. Seniors can receive 50 -70% of the appraised value of their home and live there without making monthly mortgage principle & interest payments. Loan proceeds will pay most of the closing costs and any remaining mortgage. Funds may also be used for eliminating debt, or simply improving the quality of life during your retirement years. Homeowners are responsible for their property taxes and home insurance.
Government insured
The HECM is a federally insured and guaranteed program. It is a safe way for you to access the equity in your home without ever making a mortgage payment.
No matter what happens to the economy, how much money you receive, or how long you live in your home you will never be required to make a mortgage payment. In addition, no matter what happens to your lender or your home's value you have guaranteed access to your money.
This is a non-recourse loan, when all borrowers no longer live in the property the heirs may choose new financing to pay off the reverse loan and keep the home , They will never owe more than the current market value. The home may be sold and the lender will receive what is owed with the remaining proceeds going to the estate.
How are Reverse Mortgages different today?
The program is highly regulated and continues to make changes that benefit and protect the borrower. Recent changes include:
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A younger spouse, under age 62 can remain in the home after the loss of the primary borrower, but the funds available will be based on the younger age.
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HUD upfront mortgage insurance at closing has been greatly reduced for borrowers
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Income and other assets are reviewed to determine a reasonable expectation that the borrower will have funds available annually for their property taxes, homeowner insurance, general property maintenance and any homeowner association fees.