The Most Common Questions
FHA's Reverse Mortgage Program, the Home Equity Conversion Mortgage (aka HECM’s) really are a safe, secure loan. In the course of my business I often run across some common misconceptions. I’d like to take this opportunity to educate the reader about some of the most common questions and myths about this loan.
- How much can I borrow? Loan amounts are determined by three factors:
- Age of the youngest borrower (the older you are the more you can borrow)
- Home value (the higher the home value, the more you can borrow with a cap on calculations at $625,500)
- Current interest rates.
- Will the bank own my home? No. You remain the owner of your home and can stay as long as you wish, as long as you pay property taxes, keep the home insured and maintain the home. When your home is sold, the reverse mortgage is repaid (along with accrued interest and anyfees) and any remaining equity goes to you or your heirs.
- Can I qualify for a reverse mortgage if I already have a home loan (or two)? Absolutely, IF you qualify for enough reverse mortgage funds to pay off your existing mortgage(s) or are willing to provide any shortage. I have had homeowners willing and able to bring funds to closing in order to obtain the benefit of no more mortgage payments! Bye bye house payment!
- Will my income or credit score affect my eligibility for a reverse mortgage? Not really. Because you don't make monthly payments on a reverse, your income and credit score are NOT required. HOWEVER, you must not have a recent foreclosure or any defaulted federal debts or have a non-discharged bankruptcy.
- What if I outlive the Reverse Mortgage? Not to worry, you cannot outlive a reverse mortgage. The actual due date is 150 years from the date of the youngest borrower OR when the last remaining borrower no longer lives permanently in the home. No matter if you run out of equity, use all the available RM funds, or become “underwater” on the debt, owing more than value. Your obligation remains the same - Live in the home, maintain the home, keep the property taxes and insurance current.
By Deborah Nance
Your Local Southern California Reverse Mortgage Professional
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iReverse Home Loans, LLC, NMLS#810502 originates reverse mortgages in Alabama, Alaska, Arizona (MB-0919584), California, Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon (ML-5378), Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont (1164-MB), Virginia, Washington and Wisconsin.
Important Information: Reverse Mortgages are neither "endorsed" nor "approved" by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage loan to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, we strongly recommend that you consult with a qualified independent housing counselor, family members and other trusted advisers before making this decision. This website is not from HUD or FHA and was not approved by HUD or any government agency.