Reverse Mortgage
Guide

Reverse loans are reliable means for older homeowners to convert their home’s value into tax-free cash without having to sell or move. Insured by the U.S. government, the Department of Housing and Urban Development (HUD) allows homeowners age 62 or older to borrow against the equity of their homes.

How Does It Work?
Qualified homeowners can choose to receive tax-free payments from reverse mortgage lenders on a monthly basis, in a lump sum, or as a line of credit. They can opt for monthly or interest-only payments or pay toward the principal. Payments aren’t required while the borrower lives in the primary residence.

However, the lenders must recover the loan amount and interest when the homeowner moves out or passes away. When the loan has been repaid in full, all equity associated with the property will be distributed to the borrower’s heirs.

Things To Keep in Mind
Reverse mortgages let homeowners continue to own their houses and the amount owed accumulates over time because there are no monthly payments due. That means the loan amount and remaining equity decrease unless the property value grows enough to offset the balance increase. This loan also requires only minor income or credit checks and does not affect Social Security and Medicare benefits.

Additionally, borrowers must continue paying homeowner’s insurance and property taxes during the load period. They are also responsible for keeping up with repairs. Just like without a mortgage, failure to adhere to these obligations may cause the loan to become due.

The amount of the loan is based on:

• The age of the youngest borrower
• The appraised value of the property
• The borrower’s minor income and credit history

HECM — The home equity conversion mortgage (HECM) is the only reverse mortgage that is insured by the Federal Housing Administration (FHA). It offers four draw options:

• Monthly Income for a Fixed Term or Life
• Line of Credit
• Lump Sum
• Any Combination of the Above

The FHA guarantees that HECM lenders meet their obligations, governs the loan amount qualified homeowners can borrow, and limits loan costs. Because this is a government-insured program, loan counseling by an approved HUD counselor is also required.

With our reverse mortgage guide, you can make an informed decision and confidently apply for a reverse loan. Schedule an appointment with Reverse Mortgage Pro for more details or personalized assistance. Our credited lenders cater to clients in Richmond and Hampton Roads, Virginia.