Reverse mortgages (sometimes referred to as "home equity conversion loans") give older homeowners the ability to take advantage of their built-up equity without selling their home. The lender gives you money based on the equity you've built-up in your home; you get a lump sum, a monthly payment or a line of credit. The loan amount is based on the following: age of the youngest borrower or eligible non borrowing spouse, current interest rates, the lesser of appraised value or the FHA HECM lending limit; the money is generally not determined solely on equity. Repayment is not required until the time the borrower puts his home up for sale, moves (such as into a care facility) or passes away. You or representative of your estate must repay the reverse mortgage loan, interest, and finance charges after your house is sold, or you no longer live in it. The loan may also be called due and payable in the event the borrower does not comply with the terms of the loan, which include paying property taxes and homeowners insurance and properly maintaining the integrity of the home.
Who is Eligible?
The conditions of a reverse mortgage usually include being sixty-two or older, maintaining your home as your main residence, and having a small remaining mortgage balance or owning your home outright. The borrowers are also subject to a financial assessment.
Many homeowners who are on a fixed income and have a need for additional funds find reverse mortgages advantageous for their circumstance. Interest rates may be fixed or adjustable while the money is nontaxable and doesn't affect Social Security or Medicare benefits. Although Social Security and Medicare benefits are generally not affected by the loan proceeds, certain benefits, including SSI and Medicaid can be affected. The lender can't take away your residence if you live past the loan term nor may you be forced to sell your residence to pay off the loan if the balance grows to exceed property value so long as you comply with all loan terms.
Disclosure: These materials are not from HUD or FHA and were not approved by HUD or a government agency.
Bliss Mortgage, LLC can help you explore the advantages of reverse mortgages! Call us at 813-966-1888