What is a Reverse Mortgage – A reverse mortgage is a federally backed mortgage program specifically created for baby boomers ( 62 or older ) who own their home (those with mortgages also qualify), would like to keep living in this home during retirement, want to eliminate any mortgage payments, while also benefiting from releasing equity from their homes.

Home Equity Conversion Mortgage (HECM) is the technical name and FHA ( Federal Housing Association ) is the government agency insuring this program. This is a safe option for any senior who needs to receive or take out a lump sum in order to meet any expenses related to their retirement, with interest rates hitting all time low’s this is one of the best times for seniors to consider a HECM mortgage.

What a HECM reverse mortgage is -

• a loan – there is interest being charged – only difference is that there are no monthly mortgage payments – seniors must continue to pay for the property insurance/taxes/maintenance
• another method to fund a portion of your retirement – your home’s equity can provide you with lifetime monthly income
• a way for seniors to not have to move – or sell their homes in retirement
• since there are no restrictions on the funds you can use your proceeds to increase the quality of your retirement – to pay off debts – travel – medical bills – the money is yours

What a reverse mortgage is not - 

• it is not free money or a grant from the government - the bank charges interest
• not free to enter into a reverse mortgage loan – there are upfront and closing costs
• not the best idea if you are thinking about moving or selling the home – health issues can also factor into your decision – you have to live in the home and any absence period of 12 months will make the loan come due
• not a way for the bank to take your home – this is a myth
• not a way for the bank to take your future equity – another myth

Learn More About What Is a Reverse Mortgage 2012

What Are The Basic Requirements Qualifying For a Reverse Mortgage

1. All borrowers must be 62 or older
2. Must own home, live in the home, and be your primary residence
3. Must have equity in the home ( difference between value of home and mortgage)
4. Never have defaulted on government debt

*** important note – there is talks (October 5th 2011 HUD Letters mentions a financial underwriting) of making this program based on income and credit scores – so it is advised that seniors consider this option as soon as they believe they can benefit.***

***update – currently it has been approved for lenders to be able to review the financial ability of the borrowers who are considering a HECM reverse mortgage. This means your credit score and income are factors in this loan ( we still have lenders who dont consider income or credit in order to qualify you ).***

What a reverse mortgage does not require is a certain credit score to qualify and income is also not required in order to be eligible (we work with lenders who do not consider income or credit). The main factors are those listed above; age and equity in home will determine more specifics such as interest rates & how much you can receive.

(the more equity you have the more money you will receive ( if you don’t have a mortgage you will be viewed as less risky borrower and also be able to borrow more of the equity) also the older the homeowner the more equity they can take out).

How Does A Reverse Mortgage Work is it Different From A Home Equity Line of Credit

1.) With a reverse mortgage you will never make another mortgage payment ( instead the bank/lender pays you).

2.) Home Equity Line of Credit requires not only equity in the home but you also need to have a good credit score, and income in order to qualify ( reverse mortgage you have to be over 62 and have equity in home). Also you will have mortgage payments with the home equity loan/line of credit.

3.) With an FHA HECM reverse mortgage you cannot be foreclosed or forced to vacate your house because you “missed your mortgage payment.” since there are no payments. You can use a reverse mortgage to also get out of a foreclosure if there is equity in the home. *You are responsible for the property taxes and insurance – so make sure you can afford to keep those costs.*

4.) No more worrying or stress, you have worked hard to build the equity in your home, now it is time to enjoy your equity whether you want a new monthly income, a credit line, or a lump sum the reverse mortgage will allow you to fix your finances.

5.) Home prices are expected to keep decreasing the HECM loan can act as an insurance policy – it protects seniors from declining home prices – all the equity no matter which way home prices go belongs to you and your family – your heirs do not have to worry about assuming your debt either as this is a non recourse loan – thus if for any reason you owe more on the home than the current market value – FHA will pay this difference back to the bank.

Reverse mortgages have gained popularity because they allow seniors who otherwise would have no other means of retiring a potential lifetime income through the use of their home. This program is backed by the government and we strongly believe in its benefits, and our job is to make sure you will receive the best rate/fees when closing.

What a reverse mortgage is not

• this is not free money ( its a mortgage which does not have to be paid on a monthly basis )
• its not a way for bank to take your home ( you keep ownership of the home and equity in it- and future equity )
• the most expensive option, currently some lenders wont charge closing costs and with the HECM saver it becomes very affordable ( other options are more expensive such as selling a home than buying a smaller home since you will have mortgage and real estate fees involved)
• not dangerous or a scam – instead this is one of the most protect and monitored programs since it deals with seniors there are many safety features

To recap a reverse mortgage is a solution to homeowners over the age 62 who want to live in their current home but need more money, either short term or long term ( monthly income for life, or lump sum). Anyone who is over the age of 62, owns a home , and has equity can qualify to receive a reverse mortgage there is not a credit score/income requirement unlike traditional mortgages.

Currently some 100,000+ seniors receive reverse mortgages annually which goes to show that this is a popular option for seniors who want to secure their retirement. The loan is becoming more popular among financial advisers, retirement planners as well, and with the current outlook for the economy it is simple to understand why this loan makes so much sense. We encourage all seniors to learn more ( reverse mortgage information ) and also to use our free mortgage comparison service to save both time/money on a reverse mortgage loan.

Reverse Mortgage Myths

• Myth The bank will own your home.
• Myth Your children will be held responsible for paying the loan back.
• Myth Reverse mortgage lenders take advantage of seniors.
• Myth You need good income and credit scores to qualify for reverse loan.
• Myth To qualify, you must own your home free and clear.
• Myth You won’t have any equity left in your home to leave for your heirs.
• Myth Once you get a reverse mortgage, you cannot sell your home.
• Myth You will see a reduction in your Social Security income.
• Myth Reverse mortgages are only for seniors that are poor.
• Myth Closing costs are way too expensive.
• Myth The loan is due and payable when the first borrower dies.

to learn more visit

reverse mortgages how they work
reverse mortgage pros and cons
reverse mortgage information
reverse mortgage calculator
reverse mortgage rates

WHAT IS A REVERSE MORTGAGE | WHAT IS A HECM REVERSE LOAN By Paul Galante – Add me to your circles