Do I qualify?
You must be age 62 or better. (A non-borrowing spouse may be under 62)
You must live in your home as your primary residence.
You must own your home.
You must meet the financial requirements of the HECM loan.
Does the lender own my home?
HECM borrowers retain ownership of their homes. You are not relinquishing title by using a HECM loan but borrowing against the value of your home. Like all mortgage loans, the HECM loan is secured by a mortgage (lien) and you will not lose your home as long as you continue to meet loan obligations. Obligations include occupying the home as a primary residence, maintaining the home according to FHA requirements, paying property taxes and homeowners insurance.
Are there restrictions on how to use the loan proceeds?
The proceeds from a HECM loan can be used for almost any purpose. It is your choice. Many homeowners use proceeds to eliminate mortgage payments by paying off an existing mortgage (requirement of the HECM), supplement retirement income, delay receiving social security benefits, pay-off high interest credit cards, pay medical expenses, prepare for in-home care, remodel the home, or help adult children.
Is it required that the home be free and clear of existing mortgages?
Many borrowers use the HECM loan to pay-off an existing mortgage and eliminate the obligation to make monthly mortgage payments. Paying off the existing mortgage and any other liens is required as part of the loan. It is the borrower’s responsibility to continue to pay property taxes, homeowner’s insurance and home maintenance.
Once loan proceeds are received, do I have to pay taxes on them?
Just as with any loan, HECM proceeds are paid out tax-free as it is not considered income. However, it is always advised that you consult your financial advisor and appropriate government agencies for any effect on taxes.
How much money can I qualify for?
The amount of money that you can receive from a reverse mortgage depends on four factors:
1) Your age (based on youngest borrower)
2) Your home value (based on an appraisal that will be part of the loan process)
3) The interest rate on your loan
4) Your current mortgage balance (You must use the proceeds to pay-off an existing mortgage)
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Reverse mortgage loan funds can be disbursed in a full or partial lump sum, as a line of credit, through monthly payments or as a combination of any of these.
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We will discuss and analyze the optimal way to structure your loan in order to meet and achieve your goals. It is ultimately always your choice!​
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My intent here is to answer as many questions as possible to assist in your quest for information, as I know it can be a little difficult to find…However I’m sure there are probably still unanswered questions- I am happy to answer them! Let’s talk!
This content is not from HUD or FHA and is not approved by HUD or a government agency.
