What is a reverse mortgage?
The Modern Reverse Mortgage is a Federally created, Federally insured mortgage program exclusively for a senior (age 62 for the FHA version, age 55 for the proprietary version) homeowner or senior home buyer. The FHA Home Equity Conversion Mortgage, crated by HUD in 1987 and signed into Federal Law in 1988 allows those eligible to access some of the wealth that has been created in their homes without the need to make a monthly mortgage payment.
How can I use the proceeds from a Reverse Mortgage?
The number one use of funds from the Modern Reverse Mortgage is Home Improvement followed by the elimination of a current monthly mortgage payment. Important note, this program is still considered a mortgage, the lender will charge interest for the use of their money just as with a conventional mortgage expect no repayment is required until the homeowner decides to pay off the loan, sell the home or passes away, the homeowner retains title tot home, the loan can be paid off at any time, sold, and if the borrower is in the home when they pass the home will pass to their heirs.
How can I qualify for a reverse mortgage?
First, this is an age restricted mortgage program. For the FHA version one of the borrowers must be at least age 62 (the other must be at least age 18). For the Proprietary or Jumbo Reverse Mortgage minimum age can be as young as 55 state dependent. You must be a home owner, the home can be paid for or still with a mortgage. Or you can be purchasing a home. The property can be a Single Family Residence, an HUD approved Condominium, a PUD, a manufactured home on land owned by you or a duplex, triplex or fourplex.
How much money can I get from a reverse mortgage?
HUD uses a calculation based on the age of the youngest borrower, the value of the home (or in the instance of the FHA HECM the Maximum Claim amount currently at $1,089,300) and the Expected Rate (based on the 10 Year Swap Rate). And while the borrowers "willingness and capacity" to handle property costs are evaluated, unlike a conventional mortgage the lender does not use income, credit score or loan to value to determine your loan amount. And, the Reverse Mortgage rate of interest is one that you select... having an 800+ credit score will not gain you a lower rate, nor will having a 600 - credit score gain you a higher rate - you qualify for all available rates!
