To be eligible for a reverse mortgage, HUD’s Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older, and uses the home as their primary residence.  You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan.  There are no income or credit requirements necessary in order to qualify for a reverse mortgage.  

Your home must be a single family dwelling or a one-to-four unit property that you own and occupy.  Townhouses, detached homes, condominiums, and some manufactured homes are eligible.  CO-OP’S such as Leisure World are also eligible.    

What is the difference between a reverse mortgage and a traditional home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments.  The reverse mortgage is different in that it pays you, and is available regardless of your current income.  The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or county limit.

You don't make payments, because the loan is not due as long as the house is your principal residence.  And because there are no required monthly payments, you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

With most reverse mortgage products you have the ability to choose your own payment plan.  Based on the amount you qualify for and your financial needs, we will help you make the right decision.  The majority of our borrowers use the first portion of their available loan amount to payoff existing debt, such as their current mortgage.  The remaining available loan amount may be accessed in one of the following ways:

Lump Sum – draw the entire loan amount all at once, as a lump sum.

Line of Credit – draw funds as needed from the available line of credit.  You only accumulate interest on the amount you have drawn. 

Tenure – receive equal monthly payments for as long as one of the borrowers’ lives and continues to occupy the home.

Term – receive equal monthly payments for a fixed period of months selected by you.

Modified Tenure – receive a line of credit with equal monthly payments for as long as one of the borrowers’ lives and continues to occupy the home.

Modified Term – receive a line of credit with equal monthly payments for a fixed period of months selected by you.

If I get a reverse mortgage, what are my requirements as a borrower?

Like all homeowners, you still are required to pay your property taxes, maintain property insurance, and maintain the condition of your home. 

Does a Reverse Mortgage Loan affect my Pension, Social Security, or Medicare Benefits?

No, the funds from a reverse mortgage do not affect regular Pension, Social Security or Medicare benefits.

Can I get a reverse mortgage if my home is in a living trust?

Yes, you can still get a reverse mortgage as long as you pay off your existing mortgage with the first portion of your available loan amount.

There are reverse mortgage programs that require no closing costs as long as the borrower draws the entire amount they qualify for in the form of a lump-sum.  Loan costs and fees are regulated by the government.  The common closing costs include the following: appraisal, credit report, title insurance, loan origination fees, FHA insurance premium and recording fees.  All of these costs can be financed and paid for by the reverse mortgage, making them no immediate burden to the borrower.

If your spouse predeceases you, he or she will continue to benefit from the reverse mortgage, as long as the home remains their principal residence. 

Your Reverse Mortgage becomes due if one or more of the following conditions is met: 1) the last surviving borrower passes away or no longer occupies the home as their primary residence; 2) the borrower fails to pay property taxes or maintain homeowners insurance; 3) the property condition deteriorates without correction beyond what is considered normal wear and tear.  It is important to remember that you cannot outlive the loan; as long as one of the borrowers continues to occupy the home as their primary residence, the loan is not due.      

Once the borrower passes or no longer uses the home as their primary residence, the heirs must repay the lender for the amount borrowed, plus the interest and servicing fees accrued.  The equity that is left after paying the lender belongs to you or your heirs.  The amount you owe will never exceed the appraised value of your home at the time you or your heirs decide to sell the home.   

No; because the IRS classifies a reverse mortgage as a loan advance rather than income, it is not taxable. 

There are no restrictions as to how you can spend the money you receive from a reverse mortgage; you can use the money in any way you choose.  The most common uses of the funds are applied towards eliminating existing debt (such as a mortgage), healthcare expenses, home improvements, or simply improving your quality of life.  For many, a reverse mortgage can provide the senior with financial security and peace of mind.