Reverse Mortgage Lenders

Understanding Reverse Mortgages

For individuals over sixty-two years old who own their home, a reverse mortgage can be a valuable tool for meeting financial needs. Unlike traditional mortgages where you make monthly payments to the lender, a reverse mortgage allows you to receive payments from the lender, which can be structured as a lump sum, fixed monthly payments, or a line of credit. Repayment is not required until you sell the home, move out permanently, or pass away.

Types of Reverse Mortgages

1. Home Equity Conversion Mortgage (HECM)

   • Description: HECMs are the most common and well-established type of reverse mortgage. They are federally insured by the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD).

   • Eligibility: The amount you can borrow depends on your age, the appraised value of your home, current interest rates, and your home's location. Generally, older homeowners with higher home equity can borrow more.

   • Limits: As of 2006, the loan limit for rural areas is $200,160, while high-cost areas have a limit of $362,790.

2. Fannie Mae Home Keeper

   • Description: Developed by Fannie Mae, this reverse mortgage product offers an alternative to HECMs and is aimed at homeowners with higher property values.

   • Advantages: The Home Keeper loans can be larger than HECMs due to a higher mortgage limit.

   • Home Keeper for Home Purchase Program: This allows seniors to use the reverse mortgage to purchase a new home. For example, if you sell your home and make a $60,000 profit but wish to buy a $100,000 home, you can use the Home Keeper loan to cover the difference, reducing the need to dip into your savings.

Finding the Right Reverse Mortgage Lender

Several lenders, including banks and credit unions, offer reverse mortgages. It's crucial to shop around and compare rates and terms from different institutions. Rates can vary, so seeking out multiple lenders can help you find the best deal.

Benefits and Considerations

• Benefits:

  • Provides funds without requiring monthly payments.

  • Funds can be received as a lump sum, monthly payments, or a line of credit.

  • Allows seniors to access home equity while continuing to live in their home.

• Considerations:

  • The loan must be repaid when the homeowner sells the home, moves out permanently, or passes away.

  • The amount available to borrow is influenced by your age, home value, and other factors.

  • Interest and fees may apply, which can affect the overall cost of the loan.

Reverse mortgages offer flexibility and financial relief, particularly for retirees looking to tap into their home equity. For detailed information and to explore options, contacting reverse mortgage lenders and reviewing their terms will help you make an informed decision.