What is a reverse mortgage?

A reverse mortgage enables homeowners to convert the equity in their home into cash, while continuing to live in their home.

The homeowners can be paid their equity in one of three different ways (or any combination):

• in a lump sum
• as monthly income for life or a fixed number of years
• as a line of credit.

Are reverse mortgages only for the "needy"?

Reverse Mortgages are NOT solely for the needy. They are used by anyone who wishes to convert equity value in their home to liquid assets.

This FHA-HUD government program was originally designed to provide revenue for senior homeowners who needed additional income to remain in their homes.

However, everyone over 62 whose homes have developed substantial "phantom equity" due to inflation, those who own their homes free and clear, and seniors who have a relatively small mortgage, can now convert their previously non-liquid equity into cash, a line of credit, or a lifetime income.

No repayment is required for as long as you continue to live in your home!

In short, the government's FHA-insured HUD Reverse Mortgage program now provides senior homeowners a safe way to access the equity in their homes, enabling them to enjoy their retirement years with greater financial comfort.

What are the benefits of a reverse mortgage?

A benefit that may surprise some people is that the debt can never exceed the value of the home.

That means that if today's lofty housing prices start to decline, your heirs won't be held responsible for paying back a larger amount, and have to write a check themselves.

Additionally, accepting the money in no way alters the ownership of the house.

To repeat, no repayment is required for as long as you continue to live in your home!

What can I use the money for?

This is your money to use for whatever you want, be it home repairs, a vacation, to pay medical bills, credit card debt or to supplement your monthly social security check.

Do I have to repay the reverse mortgage?

As long as you live in your home you will not have to repay a HUD reverse mortgage. Once you no longer live in your home or if you sell your home, then you or your estate will repay the cash you received from the reverse mortgage, plus interest and closing costs.

Can the lender take my home away?

NO! You cannot outlive the loan agreement. You cannot be forced to sell your home to pay off the mortgage loan. HUD's Federal Housing Administration guarantees that you will receive all the payments that are owed to you.

Will I still have an estate that I can leave to my heirs?

When your home no longer is your primary residence, because you have sold it or are no longer living there, then you or your estate will repay the cash you received from the reverse mortgage. You or your estate will also have to repay interest and closing costs to the lender.

Any remaining equity in your home can be passed on to your heirs. None of your other assets will be affected by HUD's reverse mortgage.

Why should I get a reverse mortgage and not a bank home loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income to qualify for the loan. With an FHA-insured HUD Reverse Mortgage you cannot be foreclosed or forced to leave your home because you missed a mortgage payment.

How do I qualify for a reverse mortgage?

• You must be age 62 or older.
• Your home must be owned free and clear or have a mortgage balance that can be paid from equity.
• It must be your principal residence.
• The property must be a single-family home, a one-to-four unit dwelling with one unit occupied by the applicant, a manufactured home (mobile home), or a unit in condominiums or Planned Unit Developments.
• The property must meet minimum property standards.