Just What is a Reverse Mortgage?
A reverse mortgage or HECM, which stands for Home Equity Conversion Mortgage, is a special type of loan which enables homeowners age 62 and above to convert part of the equity in their home into tax-free cash without having to sell the home, give up title, or take on a new monthly mortgage payment. A reverse mortgage will not affect Social Security or Medicare, and there are no health qualifications or stipulations on the use of the proceeds. And although no mortgage payments are required, you are free to make mortgage payments any time.
Currently, the reverse mortgage that is available is the Home Equity Conversion Mortgage (HECM) which was created by the federal government and is managed by the Department of Housing and Urban Development (HUD). These loans are insured by the Federal Housing Administration (FHA) and require that all borrowers:
* Be at least 62 years of age at closing and own their home
* Reside in a single family home as their primary residence (1-4 units, FHA approved condos, PUDs, manufactured homes, some mixed-use & commercial)
* Receive HUD-approved reverse mortgage counseling
* Not be delinquent on any federal debt
If your home is valued at over $500,000, there is a JUMBO reverse mortgage option available. A reverse mortgage comparison will outline which program is best for you. (SEE BELOW FOR JUMBO REVERSE MORTGAGES)