What Is A Reverse Mortgage?
A Reverse Mortgage, officially named the Home Equity Conversion Mortgage (HECM), is a government insured or FHA loan available to individuals age 62 or better. There are currently 2 types of Reverse Mortgages with 2 distinct differences.
Traditional Reverse Mortgage (Refinance)
Borrowers can use a Reverse Mortgage to refinance their primary residence and convert the equity to income or assets. The traditional Reverse Mortgage allows for homeowners age 62 or better to refinance their primary residence. It is based on the age of the youngest borrower. It allows the borrower(s) to access a portion of the available equity in their home. The equity may then be converted to cash or income. This may help supplement financial goals, travel, maintaining a certain lifestyle, repairs or improvements to the home or even pay for home care. You may have the option to receive the available funds in a lump sum payment, a line of credit (similar to a Home Equity Loan), monthly payments or some combination of all of these.
Reverse Mortgage for Purchase (HECM for Purchase or H4P)
In 2009, FHA introduced a “New” Reverse Mortgage for those who wanted to purchase a home, also known as a HECM for Purchase or H4P. This alternative financing option, also for homeowners age 62 or better, helps those who may be looking to MOVE from their large family home to a home that may be newer, smaller, single story or maintenance free. Different than the traditional Reverse Mortgage described above, the borrower(s) are required to contribute a down payment, again based on the age of the youngest borrower, to secure this type of financing. Click Here to learn more about the HECM for Purchase.
With either option, the borrower(s) can retire in their home, NEVER have a mortgage payment and only be responsible for taxes, insurance, condo association dues (if applicable) and routine maintenance, for as long as they live in the home. Click Here to learn more.
How do I Qualify for a Reverse Mortgage?
In addition to at least one borrower being 62 or older, there are minimal credit and income requirements. Click Here to learn more.
Learn How to Schedule your counseling
If you are planning on financing using a Reverse Mortgage, FHA Requires that you be independently counseled by an approved provider. Click Here to learn more about counseling.
Reverse Mortgage Application Process
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