HUD Reverse Mortgages

Get the Truth About All Reverse Mortgage Options
   

  
ABOUT REVERSE MORTGAGES
 
What is a Reverse Mortgage?
    
Allows a homeowner convert a portion of the value in his or her home into cash. The value built up over years can be paid back to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence.

How much money can I get from my home? HUD Reverse Mortgage Calculator
Loan Limit: $625,500.
   
        
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home.

How You Receive Your Money
	Lump Sum
	Monthly Payments (your choice of loan advances for a specific period, or for as long as you live in your home)
	Line of Credit (unscheduled payments or in installments, at times and in amounts of borrower's choosing until the line of credit is exhausted)
	Any combination you would like of the above three choices

Can I qualify for a HUD Reverse Mortgage?
    
To be eligible for a HUD Reverse Mortgage, you must be a homeowners aged 62 or older, occupy the home as your primary residence, pay off any existing liens at the time of settlement and speak with a HUD-approved housing counselor.
       
Do I have to pay income tax on the proceeds?
         
NO. The proceeds received from a Reverse Mortgage are loan advances and not taxable income. For your specific situation, we recommend that you consult your tax advisor.
 
Will this income affect my Social Security or Medicare benefits? The Answer is NO.
    
Money from a Reverse Mortgage is not considered income, nor does it affect Social Security or Medicare.
 
What types of homes are eligible?
    
Your home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved under the Spot Loan program.

Can the lender take my home away if I outlive the loan?
    
No! Nor is the loan due. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keep the taxes and insurance current. You can never owe more than your home's value. Guaranteed by the Federal Government.
   
Can I still leave my home to my heirs?
    
When you no longer live in your home as your primary residence, you or your estate will repay the money you borrowed, plus interest and other fees.  The money left over after you have repaid the Reverse Mortgage will belong to you or your estate.  None of your other assets will be affected by HUD’s Reverse Mortgage.

HECM (Home Equity Conversion Mortgage)

• Guaranteed by FHA/HUD
• Flexible Income Payment Option
• Growing Line of Credit
• Maximum Lending Limit $625,500

Basic Features of the Reverse Mortgage
    
With a reverse mortgage, you remain the owner of your home just like when you had a traditional mortgage. You are still responsible for paying your property taxes and home-owner insurance and for making property repairs.

When the loan becomes due, you or your heirs must repay all of your cash advances plus interest. Lenders don't want your house; they want repayment. Be assured that lenders will give you and your estate ample time to settle the loan.

Financing Fees
    
You can use the money you get from a reverse mortgage to pay the various fees that are charged on the loan. This is called "financing" the loan costs. The costs are added to your loan balance, and you pay them back plus interest when the loan is over.

Loan Amounts
    
The amount of money you can get depends on the specific reverse mortgage program you select. It also depends on your age, the value of your home and current interest rates.

Debt Payoff
    
Reverse mortgages generally must be "first" mortgages, that is, they must be the primary debt against your home. If you now owe any money on your property, you generally must either :

• pay off the old debt with the money you get from a reverse mortgage

• or pay off the old debt before you get a reverse mortgage

Most reverse mortgage borrowers pay off any home debt with a lump sum advance from their reverse mortgage. Credit cards, car payments and other unsecured debt is not required to be paid off.

Debt Limit
    
The debt you owe on a reverse mortgage equals all the loan advances you receive (including any you used to finance the loan or to pay off prior debt), plus all the interest that is added to your loan balance. If that amount is less than your home is worth when you pay back the loan, then you (or your estate) keep whatever amount is left over.

You can never owe more than what your home is worth at the time the loan is repaid. The lender may not seek repayment from your income, your other assets, or from your heirs. This is guaranteed by the Federal Government.

Repayment
    
All reverse mortgages are due and payable when the last surviving borrower dies, sells the home, or permanently moves out of the home. (Typically, a "permanent move" means that neither you nor any other co-borrower has lived in your home for one continuous year.)

Reverse mortgage lenders can also require repayment at any time if you:

• fail to pay your property taxes;

• fail to maintain and repair your home; or

• fail to keep your home insured.

These are fairly standard "conditions of default" on any mortgage. On a reverse mortgage, however, lenders generally have the option to pay for these expenses by reducing your loan advances and using the difference to pay these obligations.