If you are 62 and older you may qualify for a reverse mortgage loan. Contact us to see if you qualify!
A Home Equity Conversion Mortgage (HECM) is the formal name of the federally insured product that many commonly refer to as a reverse mortgage. A HECM will help qualified homeowners 62 and older enhance their cash flow during retirement. There are also proprietary reverse mortgages available for higher-valued properties (usually over $700,000 in value) which are not insured by the Federal Housing Administration (FHA). Jumbo reverse mortgages are unique and serve a variety of needs.
HOW DO I QUALIFY FOR A REVERSE MORTGAGE?
You must be at least 62 years old and own your home. You must have enough equity in your home to pay off any outstanding liens, and your home must be your primary residence. Minimal income and credit requirements must also be met. Social Security is often enough income and even poor credit can often be overcome.
Imagine living in your home without a monthly mortgage payment*, and instead enjoying monthly loan proceeds from the years you’ve invested in your home! You will gain access to some of your housing wealth and remain in the home you love for the rest of your life, or until you decide to sell. In addition, a reverse mortgage will give you peace of mind since it is insured by FHA. It’s your home, now you can put it to work for you!
Your heirs and/or your estate never inherit any debt. This is a non-recourse loan meaning you can never owe more than the home is worth. Your heirs may sell the home, pay off the reverse mortgage and keep the rest of the equity, or if they would like to keep the home, they can refinance the loan balance into their name(s) or 95% of the appraised value at that time, whichever is less.
When you have a reverse mortgage, no payments are necessary, and the loan does not get repaid until the last borrower or non-borrowing spouse leaves the home permanently. You are, of course, still responsible for property taxes and homeowner’s insurance, HOA (if you have it), and must maintain the home.
HECM counseling is also required. This is for your protection and is with a third-party government approved counselor and is often done over the phone.
Loan proceeds are not taxable by the federal government, but it is always good to check with your tax advisor about how the proceeds may affect needs-based programs such as Medicaid and Medi-Cal.** There are powerful ways that a reverse mortgage can benefit those who are on Medicaid. Give us a call for more information.
THE FACTS ABOUT REVERSE MORTGAGES
- At least one borrower must be 62 or older.
- It must be your primary residence.
- You should have between 30% and 60% equity in your home depending on the age of the youngest borrower or non-borrowing spouse.
- You always own your home; the lender never does.
- Loan proceeds are not taxable. (Check with your tax advisor.)
- No monthly payments are required, and the loan comes due when the last borrower or non-borrowing spouse leaves the home permanently.
- HECM counseling is required.
* You are still responsible for paying property taxes, homeowner’s insurance and maintaining the property. Failure to do so could make the loan due and payable. **Borrowers should seek professional tax advice regarding reverse mortgage proceeds.