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  • Writer's pictureNichole Fox

What is a Reverse Mortgage Loan?

A Reverse Mortgage is a loan which the homeowner does not have to pay back for as long as he/she lives in the home as a primary residence and complies with the terms of the loan. It is also commonly called a Home Equity Conversion Mortgage or (HECM) loan.

If you are like most seniors, your home equity represents as much as 60-80% of your total net worth. You may have real concerns about rising health care costs, having enough money to live comfortably in retirement, and making sure there is enough retirement savings to last.

With a reverse mortgage, the value of your home may be turned into cash, and you don't have to repay it until you sell or move out of the home. You still need to pay property taxes, insurance, and keep up with the maintenance of your home, but you won't have to make monthly mortgage payments.

You can receive this money in one of several different ways:

  • Single lump sum of cash

  • Line of credit

  • Monthly tenure payments

  • Or any combination of the above!

Regardless of how you choose to receive the proceeds, you are not expected to pay back the reverse mortgage until you move out of, or sell the home.*

HECM Reverse Mortgages are considered to be safe. The loan is government-insured by the FHA and can only be offered by a licensed loan officer in your state. There are a number of protections in place to make sure that all seniors who are considering a reverse mortgage are well-informed of the financial impact, before they make the decision to proceed. This includes independent, 3rd party counseling from a HUD approved HECM counselor.

There are protections in place for your spouse, if they are not on the loan. In addition, the loan is insured by FHA to protect the estate in the event that the loan grows larger than the value of the house. With a HECM reverse mortgage, you cannot owe the bank more than your home is worth.

To qualify for a reverse mortgage loan, the youngest borrower must be at least 62+years old and you must live in your home at least 6 months out of the year. To find out how much you can receive from a Reverse Mortgage Loan, call Freedomstar Financial at 888-659-0033, or request a quote.

*Loan can be called due and payable if the borrower fails to comply with the loan terms, which include paying property taxes, homeowner's insurance, and maintenance costs.

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