Reverse Mortgage Loans for Seniors

What is a Reverse Mortgage?

A reverse mortgage is a loan available to seniors over the age of 62, or 55 for Jumbo Reverse Loans, which allows you to convert equity in your home into cash. These loans were created to give seniors access to cash for expenses such as home improvements, unexpected medical costs, and in-home care by utilizing the accumulated equity in their homes.

This type of loan is called a reverse mortgage because instead of the borrower making monthly payments to their lender as they would with a traditional mortgage, the lender makes payments to the borrower. Unlike a traditional home equity loan or second mortgage, a reverse mortgage does not have to be repaid until the borrower no longer occupies the home as their primary residence.

The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM) which is insured by the FHA.  An alternative option is the Proprietary Reverse Mortgage, which is not backed by the federal government. The reverse loan limit is $1,149,825, meaning more cash may be available to the owners of high-value homes.

We’ve got answers to all your HECM questions

If you are 62 years or older, a Home Equity Conversion Mortgage (HECM) can help you borrow against your home’s equity which can give you greater financial flexibility. Here are answers to some common questions that can help you decide if a HECM is right for you. If you’d like to learn more, please contact us for expert guidance that’s tailored to your individual needs and plans.

What is a HECM?

A HECM, commonly known as a reverse mortgage, is a loan secured by your home, that can turn part of the equity you have in your home into funds you can use today, or a line of credit that will be there when you need it later in life. A HECM is insured by the Federal Housing Administration (FHA)*, and offers all the benefits of a traditional line of credit that you can get from a bank, with additional benefits, including a flexible repayment feature.  As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance, maintenance of your home, and be current with your homeowner’s association (HOA) fees.

What are the basic requirements?

You may be eligible for a HECM if you are at least 62 years old, own and have sufficient equity in your home, and live in the home as your primary residence at least six months out of the year.

What if I still owe money on a first or second mortgage?

You may still be eligible. Proceeds from your HECM would first be used to pay off any existing mortgage(s). This means the balance of your existing mortgage(s) will be added to the balance of your HECM.

How is a HECM different from other home equity-based loan options?

A HECM offers certain advantages over other types of loans, that provide greater flexibility and financial control:

• With a HECM line of credit, the unused amount in your credit line actually grows over time—giving you access to more available funds.
• It has a flexible repayment feature: You decide how much or how little to pay each month toward principal and interest, or you can choose to make no monthly loan payment at all. As with any home-secured loan, you must meet your loan obligations, keeping current with property taxes, insurance, maintenance, and any homeowner’s association fees.
• A HECM can’t be canceled or reduced, as long as you meet your loan obligations and live in the home as your primary residence—so it will be there when you need it.
• With an FHA-insured* HECM, you’re not responsible to pay the difference if the loan balance ever exceeds the value of your home when the loan becomes due—known as the non-recourse feature.