What is Reverse Mortgage?
Seniors across the nation are turning to a Reverse Mortgage to maintain their financial independence. Reverse Mortgages are providing the financial means for seniors to maintain or in many cases improve the quality of their lives, including helping pay their property taxes, paying for long-term healthcare or funding home repairs.
A reverse mortgage enables older homeowners (62+) to borrow against the equity in their homes without having to sell the home, give up title or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.
The Home Equity Conversion Mortgage (HECM) is the oldest and most popular reverse mortgage product. Available since 1989, HECMs are insured by the federal government through the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development.
The amount of available proceeds you can qualify for under the HECM program depends on your age, appraised home value, and current interest rates. The older you are, and the more valuable your home (and the less you owe on your home), the more funds you qualify for.
The maximum loan limit is $625,500. Simply put, if your home is worth more than $625,500, the amount of equity you are eligible to receive will be based on $625,500. If your home is worth less, then the loan amount will be based on the lower appraised home value.