Reverse Mortgage Loans

Reverse mortgages (also called home equity conversion loans) enable elderly homeowners to tap into their equity without selling their home. The lender pays you money based on the equity you've accrued in your home; you receive a lump sum, a monthly payment or a line of credit. Repayment is not necessary until the borrower sells the property, moves into a retirement community or passes away. When you sell your home or no longer use it as your primary residence, you or your estate must repay the cash you received from the reverse mortgage plus interest and other finance charges to the lender.  The loan may also become due and payable if the borrower fails to comply with the loan terms, such as paying property taxes, insurance, and maintenance costs.

Most reverse mortgages require you be at least 62 years of age and maintain the property as your principal residence.  You will receive the most financial advantage if you have a low or zero balance owed against your home however, a reverse mortgage may still be obtained even if you have a sizable balance. The balance must be paid off at closing with funds received from reverse mortgage or other sources.

Reverse mortgages are ideal for homeowners who are retired or no longer working and need to supplement their income. Interest rates can be fixed or adjustable and the money is nontaxable. Your lender cannot take property away if you outlive your loan nor can you be forced to sell your home to pay off your loan even if the loan balance grows to exceed property value as long as you continue to comply with the loan terms.

These materials are not from HUD or FHA and were not approved by HUD or a government agency.