Reverse Mortgages

Reverse Mortgages

To qualify for a reverse mortgage, applicants must be 62 years of age or older.  Applicants must undergo counseling with an unbiased third party before completing a loan.

There are three basic types of Reverse Mortgages being offered:  Uninsured, Lender-Insured, and FHA-Insured.

Uninsured Reverse Mortgage Loans

These loans provide monthly payments for a fixed term which is determined when the loan is first obtained, and the loan is due on a specific date.  This type of reverse mortgage is well-suited for short-term, significant cash needs.

Lender-Insured Reverse Mortgage Loans

This type of mortgage plan enables borrowers to receive monthly loan advances and an optional line of credit that will continue as long as they remain in their home.  This type of plan usually offers larger loans than the uninsured or FHA-Insured plan, and it provides the option of mortgaging less than the full value of one's home.

HECM Reverse Mortgage Loans

The Home Equity Conversion Mortgage is the only one that is federally insured and backed by the U.S. Department of Housing and Urban Development (HUD).  This plan is the most common and has some notable features including:  the option to select one's interest rate as well as how often it changes; flexibility in how payments are received; and the freedom to spend the money as the borrower chooses rather than requiring a use be specified.

When a reverse mortgage is obtained, the loan fees and costs incurred can be incorporated into the balance of the loan and repaid with interest when the loan terminates.