A reverse mortgage can turn your home's equity into cash to help pay living expenses during retirement.
A reverse mortgage enables older homeowners (aged 62 or older) to borrow against the equity in their homes without having to sell the home, give up title, or take on a new monthly mortgage payment.
This type of mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, like you would with a regular mortgage, a lender makes payments to you.
The reverse mortgage is safe and insured by the Federal Housing Administration (FHA), a division of the Department of Housing and Urban Development (HUD). The reverse mortgage, a national program, has helped thousands of homeowners safely access the equity in their homes, helping them better enjoy their retirement years.
The FHA reverse mortgage is a 100% non-recourse product. This means that should the home’s value decline, neither the homeowner nor his estate can ever owe more than the current value of the home. On the other hand, if the home goes up in value, after the loan amount has been repaid, all the remaining equity, and any appreciated value, goes directly to the homeowner or his heirs and estate.
With the FHA reverse mortgage you:
- Never lose title to your home (the lender does not get the house)
- Never have to make a payment as long as you live in the home
- Never can get "upside down," or owe more than the value of your home
- Never have to move (although you may move any time you wish)
The amount of money you are eligible to receive depends on your age (or the age of the youngest spouse in the case of couples), the appraised home value, and current interest rates. In general, the older you are and the more valuable your home (and the less you owe on your home), the more money you qualify for.
To be eligible for a reverse mortgage loan, some key requirements are:
- Be at least 62 years of age or older
- Live in your home as your primary residence
- Have sufficient equity in the home to pay off all existing “forward” financing
- Live in a single family home, two to four-unit owner-occupied home, townhouse, approved condominium unit, or certain manufactured homes
You must also meet the following conditions:
- Attend a HUD-approved counseling session
- Continue to pay property taxes and homeowners insurance
- Maintain the upkeep on your home
To find out if a reverse mortgage might be right for you or someone you know, contact Laurie MacNaughton at Middleburg Mortgage* at 703-477-1183 or click here to send an email.
* Middleburg Bank doing business as Middleburg Mortgage.