A reverse mortgage is a loan for homeowners aged 62 or older that uses a portion of the home’s equity as collateral. The loan generally does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 12 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not personally liable if the home sells for less than the balance of the reverse mortgage.
Eligibility for a reverse mortgage (HECM)
To be eligible for a HECM reverse mortgage, the Federal Housing Administration (FHA) requires that all homeowners be at least age 62. If there is a mortgage balance, it can be paid off completely with the proceeds of the reverse mortgage loan at the closing. Generally there are no income or credit score requirements for a reverse mortgage. Proceeds can be given to the borrower in one lump sum, or monthly installments to supplement your income. Don't sell your home reverse it!
Benefits of a reverse mortgage
Supplement your retirement income.
Eliminate debt
Pay for medical care, prescription drugs and in home care.
Cover large or unexpected expenses
Make home improvements
Modify your home for better accessibility
Travel to visit family and friends or take vacations
Contribute to your grandchildrens's college education.
Buy that new car you need or want
Live a more comfortable lifestyle.
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