Reverse Mortgage

A Reverse Mortgage is a loan that allows homeowners age 62 or older to convert part of their home equity into cash without selling their home or making monthly mortgage payments.

Instead of the homeowner paying the lender each month, the lender pays the homeowner.

1. The homeowner must be 62 years or older.
    
2. They must own their home or have significant equity.
    
3. The lender calculates how much equity can be borrowed.
    
4. The homeowner receives money as:
    
   • A lump sum 
   • Monthly payments 
   • A line of credit 
   • A combination of these.
      

The loan is usually repaid when:

• The homeowner sells the home 
• Moves out permanently 
• Or passes away.
   

Home value: $900,000
Mortgage balance: $100,000

A reverse mortgage might allow the homeowner to access $300,000–$400,000 of their equity depending on age and interest rates.

They can use the money for:

• Living expenses 
• Medical bills 
• Home improvements 
• Retirement income.
   

The most popular program is the Home Equity Conversion Mortgage (HECM) insured by the Federal Housing Administration (FHA).

This program protects borrowers so they never owe more than the home's value.

Typical requirements include:

• Minimum age 62 
• Primary residence 
• Sufficient home equity 
• Financial assessment 
• Home must meet FHA standards.
   

Even though there are no monthly mortgage payments, homeowners must still:

• Pay property taxes 
• Maintain homeowners insurance 
• Maintain the property.
   

✔ Access cash from home equity
✔ No monthly mortgage payments
✔ Can stay in the home
✔ Flexible payout options.

• Loan balance increases over time 
• Home equity decreases 
• Heirs may need to sell the home or refinance to keep it.