Faqs About Reverse Mortgages

1. What are reverse mortgages?

If you have equity available in your home, then it’s possible you may be able to convert that equity into cash payments.


It’s similar to a home equity but it’s not, if that makes sense. The comparison of the two is listed below. The brief answer here is that they are different in that a reverse mortgage does not have to be paid back until the borrower moves, becomes deceased, or defaults on the reverse mortgage requirements. The requirements are that you must have equity in your home and be over the age of 62.

2. How much of a loan can i get for my home?

There are a few factors that are involved when it comes to how much of a loan you will qualify for. The amount of a loan you can receive is based on the current interest rate, the appraised value of the home in question, the age of the borrower (must be over the age of 62), and the Mortgage Insurance Premium (PMP) you choose. So basically you will receive a much larger loan if you are considerable older, your home’s value is high, and the current interest rate is low.

3. What are the requirements to obtain a reverse mortgage?

The only requirements to obtain a reverse mortgage, are that you must be 62 years of age or older, you must own your home outright or have much equity in your home, and you are required to dwell in the house.

4. Aren’t Reverse mortgages and home equity loans the same?

With a home equity line of credit, you must show signs of income vs your debt ratio and you are also required to make monthly payments to pay off the loan. The reverse mortgage actually pays you to live in the home, and despite possibly not having any income, you may still qualify for it.

5. When does the loan become ‘due’?

The loan becomes due when you are officially deceased, you move out of the house, or the loan becomes paid in full. With reverse mortgages, it’s up to you to continue to pay taxes, etc as part of the reverse mortgage process. Also, you permanently move to a new address, do not not live in the home for a full 12 month period, or you fail to make necessary repairs to the home.

7. What about leaving my estate to my heirs?

Your reverse mortgage loan must be repaid in full before any proceeds go to heirs.

8. How do I collect my reverse mortgage payments?

With an HECM reverse mortgage, there are actually five ways you can collect your payments:

A. Monthly payments as long as the borrower lives in the home

B. Monthly payments for a fixed amount of time

C. A line of credit depending on when you need it

D. combined monthly payments plus a line of credit

E. combined monthly payments plus a line of credit at a fixed term.

You must speak with a reverse mortgage counselor before anything else. Most reverse mortgage counselors are free and if you are asked to pay a fee, run. To find a reverse mortgage counselor, go to the HUD’s website here.

For additional reverse mortgages pros and cons, visit our homepage.