A reverse mortgage is a loan that converts your home’s equity into cash without the burden of a monthly payment. The most common type of reverse mortgage is a Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA).

• Your home is your primary residence.
• Borrowers undergo a financial assessment which compares their income and assets to their current monthly credit obligations.
• At least one borrower is age 62 or older for an FHA-insured HECM, or 55 or older for a proprietary reverse mortgage.
• Your property is either a single-family residence, a multi-family property, or condominium.

• The age of the youngest borrower or non-borrowing spouse.
• The current interest rates.
• The maximum claim amount is the lesser of the appraised value of the home or the FHA lending limit, which is $1,089,300.
• For homes valued over $1.4 million, we offer proprietary reverse mortgages.

The loan becomes due and payable if the borrower passes, sells the home, moves out permanently, or fails to meet the terms of the loan. When one of these occurs, there are three main options available:

Repay the loan and keep the home:

One option is for the borrower or their heirs to repay the loan and keep the home. This can be done by paying off the loan balance using other assets or financing.

Sell the home to repay the loan:

If the home is sold for more that the amount owed on the loan, the borrower or their heirs can keep any remaining proceeds.

Deed the home to the lender:

Transferring the home’s ownership to the lender is a last resort option typically chosen when the home’s value has declined, making it difficult to repay the loan through sale or other means. Fortunately, the FHA mortgage insurance and non-recourse feature serve as an excellent safeguard in this scenario. The borrower or their heirs will never owe more than the house is worth.

A reverse mortgage provides heirs with extra time to make decisions about what to do with the home and the equity in it.

1. When a borrower passes away and has a reverse mortgage, their heirs typically have up to 12 months (6 months plus the allowance of two 90-day extensions when requested) to decide what to do with the home.

2. With a traditional mortgage, heirs must immediately assume the monthly payment or face foreclosure.

You can rest assured that your heirs won’t be encumbered by the immediate financial strain of assuming the loan. This grants them the freedom to thoughtfully evaluate their choices, gauge market conditions, and carry out any necessary home improvements or repairs. Moreover, if the home’s equity has appreciated, this added control empowers heirs to capitalize on its value and earn a higher profit once the loan is repaid.