Reverse Mortgage Programs
- Enables homeowners age 62 and older to use approximately 50% of the equity they have in their home, tax-free.
- No repayment is required until the home is no longer their principal residence.
- Helps seniors who are house-rich and cash-poor remain in their homes when they otherwise might be forced to sell.
Reverse Mortgages can help pay for:
Property taxes
Homeowners insurance
Medical expenses
Home maintenance
Benefits of the reverse mortgage:
- The homeowner always retains title and ownership of the home
- Cash advances can be used for any purpose
- Does not affect Social Security or Medicare benefits
Possible drawbacks of the mortgage:
- Closing costs may be substantial (not paid out of pocket)
- Interest rates are generally adjustable
- Loan balance continues to grow because interest and FHA-insurance fees accrue. This gradually reduces the home’s equity.
Alternatives to Reverse Mortgage
- Sell property and move to more affordable home or rental unit
- Cash in other assets
- Loans/gifts from family members
- Rent-paying roommate
- Part-time employment
- Home equity loan
- Government/local programs
Eligibility
- The youngest person on deed must be 62 years of age or older
- Owe approximately 50% or less of your home’s market value
- Property must be principal residence
Eligible Properties
- 1 – 4 unit dwellings (as long as one unit is occupied by borrower)
- Townhomes / Condominiums (condominiums must be FHA approved)
- Manufactured homes (if real estate is also owned/must meet HUD requirements)
- Co-ops are not eligible
Loan Amount is Based On
Appraised value
Age of youngest homeowner
Your Current Interest Rate
How Money Can be Received
- Lump sum – Can receive approximately 30% of home’s market value upfront and another 20% after one year
- Line of Credit – To be used when and how desired
- Tenure – A specific amount paid monthly as long as you live in your home
- Term – A set amount for a set number of months
- Combination of any of these
Closing Costs
- Origination Fee
- FHA Mortgage Insurance Premium
- Appraisal Fee
- Credit Report
- Fee for Required Counseling (paid out of pocket, approximately $125.00)
- Settlement or Closing Fee
- Title Insurance & County Recording Fees
