Reverse Mortgages

What is a reverse mortgage?

A reverse mortgage is a home loan (used for any purpose) where seniors, 62 and older, can access the equity (cash) built up in their home.

There are several different reverse mortgage programs. Fannie Mae Home Keeper®, Jumbo Cash-Out loan, and the HUD-insured Home Equity Conversion Mortgage (HECM) are three such programs. As demand increases, more reverse mortgage programs from different organizations will become available.

It is called a reverse mortgage because you borrow money from a lender, but the lender makes monthly payments to you, rather than you making monthly payments to the lender. All interest is paid at the end of the loan, rather than in the beginning.

What are some of the benefits of a reverse mortgage?

• Strengthen your personal and financial independence.
• Help pay for health care or other needs.
• You can never lose your home in foreclosure as long as you maintain the property tax and insurance payments.
• The loan is only paid off when the house is sold by you or your heirs, or all borrowers move out of the house.
• Keep your Medicare or Social Security benefits.
• Use it as a credit line and draw upon it as needed.
• Get all your cash right away.
• Get the best of both—get cash now and have a balance in reserve to use as a credit line.
• No Income Requirements: The homeowner does not need to be working and is not qualified based on income.

A growing number of senior citizens and their adult children have been buying these innovative loans in recent years to augment retirement income, pay for long term health care, or even pay for a dream vacation.  According to the USDA, the number of reverse mortgages issued has more than quadrupled this year alone compared to the early 90s when this product was first introduced.

• 5500 people per day are turning 65 in the United States
• There are 34 1/2 million senior households
• 85% of the senior population would like to remain in their home

** AARP Study

*Many criteria are considered when determining the reverse mortgage loan amount, interest rate, etc.