Real Life Money and Credit

A reverse mortgage is the special kind of home loan which lets you change a portion of the equity within your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But not like a standard home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the house as their principal residence. FHA’s HECM provides these benefits. You are able to also use a HECM to get a primary residence if you’re ready to use money available to pay the distinction between the HECM proceeds and the sales price plus closing charges for the property you’re purchasing. 

To be eligible for a FHA HECM, the FHA requires that you simply be a homeowner sixty-two years of age or older, own your home outright, or have a low mortgage balance that may be paid off at closing with proceeds from the reverse loan, plus you must live within the home. You are additionally required to receive consumer  info from an approved HECM counselor prior to getting the loan.  

After you sell your home, you or your estate will repay the money you received from the reverse mortgage and interest plus other fees, to the lender. The remaining equity within your home, if any, belongs to you or to your heirs. Find out more about HUD reverse mortgage here.

The number you can borrow depends on your age, the current interest rate, and the overall appraised worth of your home or FHA’s mortgage limits for your area, whichever is less. Usually, the more valuable your home is, the older you’re, the lower the interest, the added you can borrow. You can use an online calculator such the one on the AARP web site to get an idea of what you may be able to borrow.