Everyone's Needs are Unique
But a Desire to Enjoy Life is UniversalWhat is a HECM?
A HECM (home equity conversion mortgage) is the standard reverse mortgage product. It is a government insured loan that converts part of your home equity to be used as you wish. Instead of making a monthly payment as you would on a “traditional” mortgage, a reverse mortgage can provide you with monthly income, a lump sum at closing, or line of credit.
Who is eligible for a reverse mortgage?
HECM loans require a minimum age of 62. There are other reverse mortgage products that allow for borrowers as young as 55.
Does my credit score influence my eligibility?
Your credit score is not a primary factor in your ability to get a reverse mortgage. Eligibility is based mostly on your age and equity in the home.
What types of homes are eligible?
Owner occupied homes of most property types are eligible including single-family, condos and 2 to 4 unit multifamily properties.
Who’s responsible for paying homeowner’s insurance and property taxes?
It is your responsibility to maintain an acceptable amount of property insurance, including flood insurance where necessary. You are also responsible for paying your property taxes and HOA dues, if any.
What are the costs of a reverse mortgage?
Costs may include the following:
• Loan origination fee
• Third-party closing costs
(Such as escrow, title and appraisal)
• FHA mortgage insurance for HECM loans
• Reverse mortgage counseling fees
Many of these costs can be financed into the loan and may vary depending upon which product you select.
Are the reverse mortgage funds I receive taxable?
Funds from a reverse mortgage are generally not considered taxable income. Please consult your tax professional.
When am I required to pay off the loan?
The most common reasons the loan becomes due include, but are not limited to:
1. The last remaining borrower fails to live in the home for 12 consecutive months or permanently moves out of the home.
2. The borrower fails to pay the property taxes or homeowner’s insurance.
3. The property condition deteriorates to an unlivable condition.
Will I still own my home?
Yes. You always retain title to the property just as you would on a “traditional” mortgage.
What if I have an existing mortgage?
You are eligible for a reverse mortgage even if you still have an existing mortgage. The existing mortgage will need to be paid off with your reverse mortgage funds or from another allowable source.
How much can I borrow with a reverse mortgage?
An FHA reverse mortgage allows a maximum claim amount as of January 2023 of $1,089,300. There are also jumbo loans that exceed that limit available. Your available amount is based on several factors including your age, your home’s appraised value, current interest rates and the reverse mortgage product you choose.
What loan products are available?
There are a few different options depending on what fits best for your specific situation. There are fixed and adjustable rate mortgages. Ken will help you learn more and present all of the options that may be right for you.
How will I receive the funds from my reverse mortgage?
Depending on the product you select, you can receive your funds in a single payment at closing, monthly installments or by accessing a line of credit.
Are there limitations to what I can use my reverse mortgage funds for?
You can use the proceeds for anything you choose. You can make home improvements. You can cover unexpected medical expenses or in-home care. You can also take that dream vacation you’ve always wanted to do. The choice is yours.
Can I purchase a home with a reverse mortgage?
Yes. You would need to make a down payment and apply the reverse mortgage funds at the time of purchase. The down payment percentage is calculated based on your current age.
Will I have to make monthly mortgage payments?
No. You are only responsible for paying county taxes, homeowner’s insurance and HOA fees, if any. You can make payments toward your reverse mortgage at any time you choose, but they are not required.
If I decide to pay back the loan early, will I incur any prepayment penalties?
No. The loan can be paid back at any time without penalty or additional fees.
Who will help me through this process?
Ken is available every step of the way to answer your questions and help ease any concerns you have.