REVERSE MORTGAGE loan

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.

(The technical term for this cap on your debt is a "non-recourse limit." It means that the lender does not have legal recourse to anything other than your home's value when seeking repayment of the loan.)

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.

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