Program Features:

• Eligibility:
  • The homeowner must be at least 62 years old (in most cases).
  • The home must be the primary residence.
  • The homeowner must have significant equity in the home, typically 50% or more.
• Payment Options:
  The borrower can choose how to receive the money:
  • Lump sum: A single payment.
  • Monthly payments: Steady income over time.
  • Line of credit: Draw funds as needed.
• Repayment:
  • No monthly mortgage payments are required.
  • The loan is repaid when the homeowner sells the house, moves out permanently, or passes away.
  • The repayment amount includes the original loan plus accrued interest and fees.
• Ownership:
  • The homeowner retains ownership of the home and must continue to pay property taxes, homeowners insurance, and maintenance costs.
• Non-Recourse Loan:
  • Reverse mortgages are typically non-recourse loans, meaning the borrower or heirs won’t owe more than the home’s value, even if the loan balance exceeds it.

Types of Reverse Mortgages:

• Home Equity Conversion Mortgage (HECM):
  • Backed by the Federal Housing Administration (FHA).
  • The most common type.
  • Includes safeguards like mandatory counseling for borrowers.
• Proprietary Reverse Mortgages:
  • Private loans not backed by the government.
  • May offer larger loan amounts for higher-value homes.
• Single-Purpose Reverse Mortgages:
  • Offered by some state or local governments and nonprofits.
  • Limited to specific uses, such as home repairs or property taxes.

Advantages of a Reverse Mortgage:

• Provides a source of income for retirees.
• No monthly loan payments are required.
• Allows homeowners to stay in their homes.

Considerations:

• Reverse mortgages are best suited for those who plan to stay in their home long-term and need to supplement retirement income.
• It’s important to understand the costs, responsibilities, and implications before proceeding.
• Seek guidance from a HUD-approved counselor or a trusted financial advisor.