Reverse Mortgages

What Is a Reverse Mortgage?

A reverse mortgage is a loan for homeowners age 62 and over to convert their home’s equity into tax-free cash without having to sell or move. The amount available is determined by the amount of equity in the home and the applicant’s age.

 

All About Reverse Mortgage

A reverse mortgage is Insured by the Department of Housing and Urban Development (HUD) division of the US Government.  This enables homeowners who are 62 or older to easily borrow against the equity of their homes.

Here’s how it works: 

  • Qualifying homeowners can choose to receive tax-free payments from reverse mortgage lenders either on a monthly basis, in a lump sum, or as a line of credit.
  • No income or credit checks are required.
  • No mortgage payments are required while a borrower lives in the home.
  • Social Security and Medicare benefits are not affected.
  • Reverse mortgage lenders recover the loan amount, plus interest when the ownership of the home is transferred (ie. sold, owner moves, or passes away)
  • When the loan is paid in full, all equity associated with the property will be distributed to your heirs.

Borrowers should remember:

  • You continue to own your home.
  • There are no monthly payments due.
  • You must continue to pay your homeowners insurance and property taxes.
  • You must maintain the condition of the property.

Do I qualify for a reverse mortgage? 

You must be age 62 or older. And you must occupy the home as your primary residence – for the majority of the year. Borrowers must own the home outright or have a low enough balance on the existing mortgage that it can be paid off from the proceeds of the reverse mortgage.
Each borrower listed on the title must apply for the reverse mortgage loan, attend a free HUD counseling session and sign the loan papers. The HUD counseling is either handled in person, or over the telephone.

How is the loan amount determined?

 
The amount of the loan is based on:
  • The age of the youngest borrower.
  • The appraised amount of the property.
  • No income or credit is required.
  • The location of the property.

The reverse mortgage must also be the only mortgage held against the residence. That means that if there is a current mortgage on the property, it may be able to be paid off with the proceeds of the reverse mortgage.

 


What are my reverse mortgage options?
 
HECM — The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage that is insured by the Federal Housing Administration (FHA). The FHA guarantees that HECM lenders meet their obligations, governs how much HECM lenders may loan to qualified borrowers, and limiting loan costs. Because this is a government insured program, loan counseling is required, by an approved HUD counselor.
HECM offers 4 draw options: 

  1. Monthly income for a fixed term, or life
  2. Line of credit
  3. Lump sum
  4. Any combination of the above 3

We are conveniently located in Long Island, New York.  We have served the LI, NY comunities for over sixteen years.  Call us with any mortgage/loan questions.