What Is A Reverse Mortgage Loan?
A reverse mortgage allows individuals 62 and older to turn the equity in their home into tax-free cash without a monthly mortgage payment. Learn More
Purchased home must be your primary residence and you must receive your loan from a HUD approved counseling agency. Learn More
Reverse Mortgage Benefits
Enjoy tax free cash for an increased discretionary cash flow without monthly mortgage payments or credit score requirements. Learn More
Purchasing A Home With A Reverse Mortgage(Case Studies) Learn More
What is a reverse mortgage loan?A reverse mortgage is a way to turn a portion of the equity in your home into cash which is usually tax free* without having to make monthly mortgage payments. The loan is taken against a senior's home equity. As long as all loan terms are met, the loan becomes repayable when the last borrower leaves the home. As part of the loan, the borrower is required to continue paying property taxes and insurance, and HOA fees, if applicable; the home must also be maintained. Reverse mortgage loans can potentially help seniors manage their increasing living expenses. *This information does not constitute tax advice. Please consult a tax advisor regarding your specific situation. Learn More
The Three Basics of a Reverse Mortgage
Receive Tax Free Money From Your Home EquityA reverse mortgage can be used to turn a portion of the equity in your home into cash that can be used for many different purposes that may enhance and extend your retirement. If you currently have a mortgage, a reverse mortgage could eliminate your mortgage payment (taxes and insurance must still be paid, and the home maintained), and also allow you to access any additional equity (over and above your mortgage balance), to create accessible cash which is not readily available while in the form of home equity. You have spent many years putting your money into your home equity, and now with a reverse mortgage, you may be able to convert some of that equity into tax-free cash.*
*This advertisement does not constitute tax advice. Please consult your tax advisor for your specific situation.
Never a Mortgage Payment During the Life of the LoanA reverse mortgage is the only type of mortgage that never requires a payment of principal and interest until the last surviving borrower passes away or moves out of the home, as long as all loan terms are met. You are always required to pay household expenses such taxes and insurance, and maintain your home, but whether you take the reverse mortgage as a line of credit, monthly draws or a lump sum, you will never be required to make a payment during your lifetime as long as you live in your home and meet all other loan terms. You always have the option to make a payment if you wish. If you choose to make a payment toward your line of credit, the money may increase your available funds in your line of credit.
Never Owe More Than What the Home is WorthWhen you permanently move out of the home, whether you sell it or pass away, neither you, your estate nor your heirs are responsible to pay the deficit if the balance owed on your reverse mortgage exceeds the home value. However, should your heirs want to keep your home, they may purchase it for 95% of the current appraised value.*
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
"What the heck is a HECM?"- Jared Gibbons
A HECM is short for Home Equity Conversion Mortgage. A HECM is used by homeowners to turn the equity in your home into tax-free cash without needing to pay a monthly mortgage payment. The loan is repaid in a single lump-sum payment when the last borrower leaves the home. As part of the loan, the borrower is required to continue paying for homeowner’s insurance, property taxes, and maintaining the home. The US Department of Housing and Urban Development report over half a million households currently use a reverse mortgage insured by the Federal Housing Administration(FHA) to ensure seniors can gain financial independence from increasing living expenses.
If you are 62 years or older, the HECM for purchase loan may help you buy your next home with no mortgage payments, must still pay taxes and insurance, and maintain the home. The HECM for purchase is a reverse mortgage insured by the Federal Housing Administration (FHA) that allows seniors to use the equity from the sale of a previous residence or from other assets or savings to buy their next primary home in one transaction. Regardless of how long you live in the home or what happens to your home’s value, you only make one initial investment (down payment) towards the purchase.Learn More
Reverse Mortgage ProcessIf you are planning to apply for a reverse mortgage, here are some steps you will need to follow:
Step 1: Free Educational Consultation
Do your research and work with a company experienced in reverse mortgages, like Fairway Independent Mortgage Corporation. Our Reverse Mortgage Planners will review your individual financial situation to help determine which reverse mortgage product is right for you.
Step 2: HUD Counseling Certification
Every person that applies for a reverse mortgage must receive independent third-party counseling from a HUD-approved counselor. The counseling session will cover the basics of reverse mortgages and help you determine if this is the right financing option for you.
Step 3: Application
The next step in the process is signing your reverse mortgage application and providing your Reverse Mortgage Planner with the supporting documents needed to start the file. Your Reverse Mortgage Planner will pull your credit report, have your application prepared and then meet with you to go over and answer any questions you may have. They will also supply you with a list of additional items needed to qualify your loan.
Step 4: Order Services (Appraisal, Title, Insurance)
After you sign the application and provide supporting documentation, the processing of the loan will get started. At this time, we will order an appraisal, title report, tax history and flood certification. The processing department will review all documentation as it comes in and prepare the file for underwriting. Your Reverse Mortgage Planner or a member of their production team will keep you informed of the status and reach out to you if they see any delays in your loan.
Step 5: Processing
Once processing receives all the required documentation on your file, it will be sent to an underwriter, who will issue loan decision. We will communicate if any conditional items are needed for loan approval at this time.
Step 6: Conditional Approval Process (Underwriting)
When the underwriter has approved the loan for closing you and your Reverse Mortgage Planner will need to determine how you would like your loan proceeds dispersed based on these below options:
- Lump sum payment
- Monthly payments
- Line of credit
- Combination of the above options
Step 7: Closing
An appointment time and date will then be set up for you to meet with the title company and sign your closing docs.
Step 8: Funding
Three business days after closing your loan will fund based on the payment plan you selected.
Step 9: Your Reverse Mortgage
Your reverse mortgage will not have any required monthly payments. The reverse mortgage will only become due for the following reasons:
- The home is no longer your primary residence
- The home has sold
- The borrower passes away
Step 10: Repayment
If death does occur, the loan can be repaid from the sale of the home or refinancing the existing reverse mortgage. Equity in the home will belong to the heirs or the estate. The heirs need to contact the servicer after the passing to make arrangements with servicer on settling the reverse mortgage.
Testimonials From Clients
“S.O.S.- Savings On Steroids"- Jared Gibbons
The Financial Power and Safety of a HECM Line of Credit (L.O.C.)
1. Use as a standby line of credit.
2. Bridge the Medicare gap from 62-65.
3. Pay for life insurance.
4. No mortgage payments other than taxes, insurance and maintaining the home.*
5. Loan proceeds are tax-free which means all your investments may last longer.*
6. Purchase a second home.
Everyone has a different situation, sets of needs, wants, and challenges. It will be well worth your time to meet with one of our loan originators to receive a personalized, no-obligation consultation to see if a reverse mortgage is right for you.
*This advertisement does not constitute tax or financial advice. Please consult a tax and/or financial advisor for your specific situation.
James and Mary, who are 62 and 59, want to move to California to retire. They want to keep the same size of home they currently have but home values are more than double in California than where they live. A Realtor recommended to them that with a reverse mortgage for home purchase, they could buy a house similar to the one that they currently live in.
NOTE: One spouse must be 62 years or older to be eligible for a reverse mortgage.
James and Mary could continue to live in this $320,000 home.
They could move to a $600,000 home for $320,000 down with no monthly mortgage payments, except for taxes, insurance, and maintenance.
Clients could sell their house for $320,000 and purchase a home in sunny California for $600,000!See More
The house and stories are used for illustration purposes only. Houses may not be available for purchase.