What is a reverse mortgage?

A reverse mortgage is a home loan (used for any purpose) where seniors, 62 and older, can access the equity (cash) built up in their home.

There are several different reverse mortgage programs. Fannie Mae Home Keeper®, Jumbo Cash-Out loan, and the HUD-insured Home Equity Conversion Mortgage (HECM) are three such programs. As demand increases, more reverse mortgage programs from different organizations will become available.

It is called a Reverse Mortgage

It is called a reverse mortgage because you borrow money from a lender but the lender makes monthly payments to you, rather than you making monthly payments to the lender. All interest is paid at the end of the loan, rather than in the beginning.

What are some of the benefits of a reverse mortgage?

• Get all your cash right away.
• Help pay for health care or other needs.
• Keep your Medicare or Social Security benefits.
• Use it as a credit line and draw upon it as needed.
• Strengthen your personal and financial independence.
• Get the best of both—get cash now and have a balance in reserve to use as a credit line.
• The loan is only paid off when the house is sold by you or your heirs, or all borrowers move out of the house.
• You can never lose your home in foreclosure as long as you maintain the property tax and insurance payments.

No Income Requirements

The homeowner does not need to be working and is not qualified based on income. As the homeowner receives monthly cash income, the loan balance increases. In the following twelve-month example, the homeowner begins with a debt-free home. As money is received by the homeowner, the mortgage grows. By the end of month twelve, the homeowner owes the bank $6,000 plus $232.44 interest. All Reverse Mortgage loans have a variable rate.

1. Assumptions* Regular monthly advances $500
2. Annual interest rate 7.0 %
3. Monthly interest rate .583% (.07 / 12)

Month Beginning Balance Interest Ending Balance Cash Disbursement

• 0 0 0.00 0.00 $500.00
• 1 $500.00 $2.92 $502.92 $500.00
• 2 $1,002.92 $5.85 $1,008.77 $500.00
• 3 $1,508.77 $8.80 $1,517.57 $500.00
• 4 $2,017.57 $11.77 $2,029.34 $500.00
• 5 $2,529.34 $14.75 $2,544.09 $500.00
• 6 $3,044.09 $17.76 $3,061.85 $500.00
• 7 $3,561.85 $20.78 $3,582.63 $500.00
• 8 $4,082.63 $23.82 $4,106.44 $500.00
• 9 $4,606.44 $26.87 $4,633.31 $500.00
• 10 $5,133.31 $29.94 $5,163.26 $500.00

*Many criteria are considered when determining the reverse mortgage loan amount, interest rate, etc.

Reverse Mortgage Application

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