Reverse Mortgages
What is a Reverse Mortgage?
A Reverse Mortgage, or Home Equity Conversion Mortgage (HECM), is a loan that allows borrower(s) age 62 and older to purchase a new home, or access their equity in their existing one, without the burden of monthly mortgage payments
Why Would I Get a Reverse Mortgage?
The major benefit of a reverse mortgage is the ability to buy a home or access cash without having to make a monthly payment, alleviating borrowers’ financial burden. They are used for many purposes, including:
- Creating additional income or a financial safety net of available funds
- Financial planning to delay drawing Social Security
- Downsizing or Upsizing
- Relocations to be closer to family members or medical facilities
- Purchasing a second home or rental property
- Gifting funds to family members
- Rescuing family members in financial distress
How is a Reverse Mortgage Repaid?
Instead of making monthly payments as you would in a traditional mortgage, a reverse mortgage is paid in one lump sum at the end of the loan. This typically occurs:
- When the loan term ends
- When the borrow is deceased
- If the borrower no longer lives in the property as their primary residence
- If the borrower does not uphold the terms of the loan (adequately maintaining the property and paying taxes and insurance)
Most often, the reverse mortgage is repaid by selling the property and using the proceeds to pay off the loan.
What are the Requirements?
To be eligible for a Reverse Mortgage, you must:
- Be age 62 or older
- Have no liens or judgments against your property
- Live in the property as your primary residence
- Meet income and credit requirements (though no credit score is required)
- If purchasing a home, you must have an adequate down payment
Our mortgage experts at TILA would be happy to help you understand your Reverse Mortgage options. Contact us for a free, no-pressure consultation to see how we can help alleviate some of the financial stress in your life, or in the life of your loved one. Call (206) 766- 8888 or email us today.
*Reverse mortgages are loans offered to homeowners who are 62 or older who have equity in their homes. The loan programs allow borrowers to defer payment on the loans until they pass away, sell the home, or move out. Homeowners, however, remain responsible for the payment of taxes, insurance, maintenance, and other items. Nonpayment of these items can lead to a default under the loan terms and ultimate loss of the home. FHA insured reverse mortgages have an upfront and ongoing cost; ask your loan officer for details. These materials are not from, nor approved by HUD, FHA, or any governing agency.
