Reverse mortgages are a financial tool for seniors who want to supplement their income and enhance their lifestyle.
The FHA HECM, Home Equity Conversion Mortgage, is a federally insured loan Insured by the FHA, Federal Housing Administration, and regulated by HUD, Housing and Urban Development. The reverse mortgage is a loan for homeowners 62 years and above who wish to convert part of the equity in their home into tax-free cash. There are also proprietary jumbo reverse mortgages for higher-value homes. Much of this website outlines the FHA HECM.
* NO monthly mortgage payments -
You have the option of making mortgage payments any time you like in order to protect the equity in your home. But mortgage payments are not required.
* You continue to own your home and remain on title -
It is a myth that you lose title to your home if you obtain a reverse mortgage. You are always on title.
* Reverse mortgages will not affect Social Security, Medicare, or retirement income -
Reverse mortgage proceeds are not considered income; therefore, they do not affect your Social Security, Medicare benefits, or retirement benefits.
* Generate cash flow, pay off mortgages, pay credit card debt, your money, your choice as long as proceeds are sufficient -
* No restrictions on the use of funds - Use your proceeds however you wish: purchase a second home (perhaps for a rental), pay off credit card debt, buy a car, travel.
* Reverse mortgage options - Take cash out, set up a line of credit, receive monthly proceeds, or a combination of all three, all depending on the available equity in your home and based on the below.
* Proceeds based on the following -
1. age of the youngest borrower (the older you are, the more you receive).
2. lesser of the appraised value of your home OR the FHA max lending limit
3. current interest rates (fixed and adjustable available)
4. must pay off balances on current mortgages, liens, and judgments with reverse mortgage proceeds
Max FHA Lending Limit and Proprietary Jumbo Max Lending Limit -
The maximum FHA lending limit is $1,089,300, and proprietary reverse mortgage jumbos have a maximum lending limit of $4,000,000. The max home value for proprietary reverse mortgages is $10,000,000. With the exception of New York, some proprietary reverse mortgages are available at age 55. NOTE: All proprietary reverse mortgage loans are arranged through third party providers. Click here for the qualifications and parameters of a reverse mortgage.
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