Unlike a traditional mortgage, a reverse mortgage makes payments to you. These customizable Payments can improve your life by supplementing your monthly income, or can be had in a lump sum to cover an unexpected bill.
Our reverse mortgage loans require no repayment as long as your home is your principal residence and you fulfill the borrower’s obligations, such as maintaining the property and paying your property taxes. You pay the money back plus interest when you sell or permanently move out of your home.
If you pass away, the loan is due, but the amount due will always be the less of your loan balance or the market value of your home. Even if the amount borrowed exceeds the value of your home, you or your heirs will never owe more than the value of your home. All proceeds in excess belong to your estate, which means they can be passed onto your heirs.
Unlike a conventional mortgage, the loan balance of a reverse mortgage grows larger over time.
With a reverse mortgage you can never owe more than your home’s value at the time the loan is repaid.
If you own your home free and clear or if you have very little mortgage principal outstanding, a reverse loan may be for you.
Qualifications: There are no income, credit or payment requirements to qualify. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage, although the reverse mortgage must be the primary (first) lien against the property. Reverse mortgages can only be borrowed against your primary residence. Eligible properties include one to four-unit homes, qualified condominiums and townhouses. Manufactured homes are eligible provided that they were built after June 1976 and are permanently affixed to the ground, and if you own the ground.
Valuation: The amount of money you can get from a reverse mortgage depends on the age of the youngest borrower, the appraised home value and your location. In general, the older you are, the more valuable your home, and the less you owe on it, the more money you can get.
Implications: Reverse mortgage funds are tax free and do not affect regular Social Security or Medicare Benefits. However, if you receive a lump sum payment, any amount that you retain the month after you receive the payment counts as a resource. This could affect your Medicaid eligibility, so you may want to consult a Medicaid expert.
Counseling: Before applying for a reverse mortgage, you must call or meet with a counselor who can teach you about reverse mortgages, make sure you are using an approved lender and offer alternatives depending on your situation. To reach an AARP-approved telephone counselor, call 800-209-8085.
Repayment: The loan must be repaid when you stop using your home as a principal residence. This occurs when you (or the last remaining spouse) pass away, sell the home or move out permanently. Remember that the amount owed will never exceed the value of your home. If the sales proceeds are greater than the amount owed on the reverse mortgage, the excess money goes to you or your estate.
REVERSE MORTGAGES ARE TAX-FREE AND CAN BE PAID IN THESE WAYS: