A Home Equity Conversion Mortgage, (HECM), commonly known as a reverse mortgage loan, is a Federal Housing Administration (FHA) insured loan1 that allows borrowers, who are 62 years and older, access to a portion of their home equity without having to make monthly mortgage payments.2 If you have sufficient equity in your home, you may be able to get the cash you need to help supplement retirement, home renovations, pay for medical expenses, or put aside as a rainy day fund. You can use the money however you choose.
With a reverse mortgage, there are no monthly mortgage payments2. If there’s a mortgage on your home, it must be paid off using the proceeds from your reverse mortgage loan. If you don’t have a current mortgage, it increases the amount of money you may be eligible to receive.
All reverse mortgage applicants will undergo a financial assessment to verify income, taxes, and credit history. The Department of Housing and Urban Development (HUD) requires a financial assessment to evaluate the borrower’s ability to meet their financial obligations and mortgage requirements.3
A reverse mortgage doesn’t require a minimum credit score, your credit history is reviewed for current and/or outstanding credit obligations to determine your debt-to-income ratio. In some cases, the FHA requires a portion of the loan proceeds to be put into a Life Expectancy Set Aside (“LESA”), to assist and ensure the borrower can pay required property taxes and homeowners insurance.
Another requirement of the loan is that you will need to continue to reside in the home as your primary residence, continue to pay property taxes and homeowner’s insurance and maintain the home.
The amount of funds you can receive is determined by the following:
You can use these funds to complete home improvements, consolidate other debt, improve your cash flow, or have a ‘safety net’ for those unplanned expenses.
Borrowers can select to receive their funds in flexible disbursement5 options that can be used immediately:
If you are interested in finding out more information or if you qualify for a reverse mortgage, call (855) 218-4718 to speak with a licensed reverse mortgage advisor.