Overview

A Reverse mortgage is a loan that converts the equity in your home into funds while you retain the title. Reverse mortgages do not require monthly principal or interest payments like a traditional mortgage and, depending on the amount of equity in your home, may disburse regular payments to you. The loan balance is not due while the borrower is living in the home as their primary residence and continues to pay all other loans, taxes and obligations.

Equity is the difference between the market value of your home and the value of the liens against it. In other words, equity is how much more your home is worth than the remaining balance of your mortgage. If you own your home outright, your equity is the full value of your home.

There are no restrictions on how to use the funds from your reverse mortgage. Whatever you need to do to secure your financial independence, these funds can help you meet your goals.

A reverse mortgage essentially replaces your existing mortgage. When you secure a reverse mortgage, a portion of the funds must be used to pay off the full balance of your existing mortgage. A reverse mortgage must be the only lien against your home.

A traditional mortgage is a loan used to finance a home and requires you make monthly payments; the mortgage is used to purchase equity in the property. A reverse mortgage does the opposite: it pulls equity out of your home and converts it back into cash. Reverse mortgages do not require monthly loan payments (though you must continue paying property taxes and insurance). On a reverse mortgage the loan balance will grow monthly, but so will your bank account; on a traditional mortgage it will decrease, but so will your cash flow.

Additionally, the Home Equity Conversion Mortgage for Purchase is a new tool that allows seniors to purchase a new home using a reverse mortgage instead of a traditional mortgage. While this tool requires a large down payment, you will avoid the monthly mortgage payments associated with a traditional mortgage.

It means that both the borrower and the lender are guaranteed access to their funds. If the lender is unable to disburse funds, the FHA will provide them to the borrower. If the borrower’s credit balance exceeds the value of their home, the FHA covers the difference for the lender.

Homeowners are required to take part in a pre-loan counseling program before being approved for a reverse mortgage. As part of our obligations as a lender, we assist you with identifying a counselor in your area. Counselors will explain your obligations as a borrower in detail and discuss other financial options.

Pre-loan reverse mortgage counseling is required by law to protect consumers. By discussing the costs, implications and obligations of a reverse mortgage with an independent counselor before signing any agreement, you can make an informed decision that considers all the facts.

A reverse mortgage does not affect the major benefits of Social Security or Medicare. Contact your caseworker for more details on how your state or other benefits may be affected.

Yes. Your heirs may choose to keep the home by repaying 95% of the home’s value or sell the home and repay the loan balance (the value of the reverse mortgage disbursement plus interest) to the lender. Either way, your heirs inherit your estate and can decide what to do with the home.

Some lenders are not licensed to originate reverse mortgages and might discourage you from seeking them. Others may be unfamiliar with the particulars of reverse mortgages and feel uncomfortable discussing them. A reverse mortgage is not right for every person in every situation, but Federal Housing Authority insurance and regulations make them one of the safest options on the market.

Eligibility

You are eligible for a reverse mortgage if you own your home, all individuals on the title are 62 years of age or older, and the home is your primary residence (i.e. you live there more than six months out of the year).

In many cases, yes. It is a borrower’s duty to remain current on all taxes, insurance, and home repairs and remain current for the duration of your reverse mortgage to avoid loan repayment. If you are in default or arrears, we may be able to use a portion of your home equity to pay your taxes and homeowners insurance. A reverse mortgage can provide the funds needed to get current with arrears payments, and set money aside to pay them for the duration of the reverse mortgage.

Yes. Anyone who meets the age requirement and claims the home as their primary residence can be on the reverse mortgage.

No. A property must be your primary residence to be eligible for a reverse mortgage.

No. A reverse mortgage is only available for residential properties.

Up to three homeowners are allowed on a federally insured reverse mortgage note if they all meet the eligibility requirements.

Yes. Single family homes, 2-4 unit multi-family homes, select condominiums and manufactured homes that meet Federal Housing Authority requirements are eligible. Your loan counselor can help you determine if your home meets these requirements.

Yes. The Federal Housing Authority now considers income history and credit card debt when determining eligibility to ensure you can meet your tax and insurance obligations. We work with borrowers from all walks of life, and we will help you plan for these expenses and even set aside funds from your reverse mortgage disbursement to cover your taxes.

Reverse Mortgage for Purchase

The Home Equity Conversion Mortgage for Purchase is a tool that allows seniors to purchase a new home using a reverse mortgage instead of a traditional mortgage. You must make this new home your primary residence within 60 days of closing as part of the agreement.

While this tool requires a large down payment, you will avoid the monthly mortgage payments associated with a traditional mortgage. It was designed to allow you to move to a new home that better meets their needs without increasing your mortgage payments.

Application
  1. Fill out our online form to get a no obligation quote and begin your application.
  2. Complete the FHA Reverse Mortgage Counseling.
  3. One of our dedicated loan officers will contact you to set up an appointment and go over all the details.
  4. 1. We provide you a formal application and disclosures to review and sign. Once these have been verified, you will set up an appointment with a Federal Housing Authority–certified appraiser to assess the value of your home.
  5. Your application, disclosures, appraisal and any other required documents will be reviewed by an underwriter and approved.
  6. 1. You will sign off on all the documents with a notary to close the loan.
  7. Your funds will be disbursed.

A typical reverse mortgage transaction will take between 30 and 45 days from application to closing, depending on how quickly you can gather the required documents.

No. The financial disclosures are simply to get you the most accurate information about what you qualify for. There is no obligation to close the reverse mortgage once you see what you could receive.

Yes. You are required to maintain the health, safety and structural integrity of the home for the duration of your reverse mortgage. Certain repairs do not need to be completed before closing; we will help you plan for these future expenses and even set aside funds from your reverse mortgage disbursement to cover these repairs.

Yes. However, the homeowner must be the one to attend the mandated pre-loan counseling and sign all closing documents unless a doctor has determined that the owner is incapable of handling their own decision making.

Yes. Privacy is of the utmost importance to us. Please review our Privacy Policy for more details; any information collected from you is confidential and stored in accordance with all applicable federal and state regulations.

Costs

There is none. A reverse mortgage does not require you to make monthly principal or interest payments. You are only required to continue living in the home and meet your loan obligations (taxes, insurance, and repairs). You can make monthly, quarterly or annual payments to pay down the principal if you desire, but it is not required.

Yes. Your closing funds must be verified. They must be in the form of cash or come from the sale of a home. All funds that are not coming from the sale of a home must be in your bank account for at least 60 days before the closing date.

No. Reverse mortgages are insured by the Federal Housing Authority (FHA) and the FHA will pay any loan balance that is above the value of your home. When the loan is due, you cannot owe more than 95% of the market value of the home as determined by a licensed, FHA-certified appraiser.

Reverse mortgages were not designed to be short-term products. If you plan to sell or leave your home within the next three years, you should consider options like a traditional loan or government assistance programs.

Yes. If you qualify, a reverse mortgage can be refinanced using another reverse mortgage or a traditional mortgage. Our experts can work with you to determine if refinancing with a reverse mortgage will benefit you.

There are none. Be wary of any individuals or groups telling you to pay a fee for a reverse mortgage application.

Interest accrues on the portion of your disbursement that you have used thus far. The interest rate is set by the loan terms.

Reverse mortgage adjustable interest rates are set on the London Interbank Offered Rate Index and fixed interest rates are determined by lenders based on the secondary market for insurance products.

No. The growth feature reflects the increasing value of your home. It simply increases the line of credit you have access to; it is not the equivalent of earning money.

The Federal Housing Authority (FHA) regulates lender and broker fees for all FHA-insured reverse mortgages. Closing costs will include any fees paid to third parties to process your loan (including loan origination fees, title fees and home appraisal fees) and an upfront premium of either 0.5 or 2.5%, depending on the size of your initial disbursement.

POC stands for “paid outside of closing”. These are processing fees such as the appraisal fee and the counseling fee (when you choose to pay it out-of-pocket).

TALC stands for “Total Annual Loan Cost”. It is a measure of the cost of your reverse mortgage expressed as an annual rate and makes it easier to compare the terms of different loans. We can explain the TALC rates for different reverse mortgage products during the process.

If all the borrowers on the note make the home their primary residence and meet their loan obligations, the reverse mortgage will not be due. If a borrower leaves the home or you become delinquent on loan terms such as maintenance, insurance and taxes, the loan becomes payable.

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