What Is a Reverse Mortgage

Quick Facts

HECM (Home Equity Conversion Mortgage) loans – also known as Reverse Mortgages – can be an important financial option for seniors, their family members, and financial professionals to consider as part of an overall retirement planning strategy or to help meet cash flow needs.

Over the past 50+ years the Reverse Mortgage has positively grown in popularity and has developed into an intelligent option to increase the financial independence for homeowners 62 years of age or older.

What is a Reverse Mortgage?

A reverse mortgage, also known as a HECM (home equity conversion mortgage), allows people age 62 or older to tap into their home’s value to become more financially stable through retirement. When homeowners have built up a considerable amount of equity in their home, it is an opportunity to strengthen their financial strategy, meet their family’s retirement needs and boost their monthly income.

Funds from your reverse mortgage can be paid to you as a tax-free lump sum, a line of credit, or in monthly payments with no payment required. You can use the funds however you see fit, whether it be paying for homecare services, traveling to see family, modifying your long-term home with universal design for safety, or for anything else.

Benefits

  • Own and live in your home while receiving cash
  • No monthly mortgage payments
  • Convert your home’s equity into cash
  • Stay in your home and maintain the title
  • Unused funds from your line of credit will grow annually
  • Insured by the Federal Housing Administration (FHA)

Reverse Mortgage Requirements

  • Must be 62 years of age or older
  • The home must be the primary residence
  • Must qualify to pay taxes, insurance or HOA fees if applicable
  • Own your home outright, or have a low balance on your mortgage that can be paid off at closing with proceeds from the reverse loan
  • Must have financial resources to pay ongoing property fees
  • Must meet with a Department of Housing and Urban Development (HUD) reverse mortgage counselor

Eligible Residences

  • Single-family home
  • FHA-approved condominium
  • Two- to four-unit dwelling (townhouse, duplex)
  • Manufactured home that meets FHA requirements

Reverse Mortgage Loan Options

A home equity conversion mortgage (HECM) is a loan that is insured by the Federal Housing Administration (FHA). Most reverse mortgages are HECMs. There are two types of reverse mortgages:

Reverse Mortgage Purchase

A home equity conversion mortgage for purchase, otherwise known as a reverse mortgage purchase, allows homebuyers age 62 or older to purchase or build their home with a one-time investment of their own funds (typically from the sale of a previous home or other retirement funds). Essentially, you’re purchasing your new home with only the down payment.

Interested in a Reverse Mortgage for Purchase? Learn more about them HERE.

Reverse Mortgage Refinance

A home equity conversion mortgage for refinance, otherwise known as a reverse mortgage refinance, allows homeowners age 62 or older to access their home’s equity and convert into cash to help with retirement needs.

Interested in a Reverse Mortgage for Refinance? Learn more about them HERE.

Reverse Mortgage clients are responsible for maintaining their homeowners insurance, property taxes and general maintenance of their property.

We're here to answer all of your Reverse Mortgage questions

A friendly HECM expert is available to answer your questions at (503) 232-6659 or by email at info@equityaccessrm.com