Reverse Mortgage FAQ
Facts about Reverse Mortgage Agreements
This reverse mortgage FAQ answers the most common questions our clients ask during the loan process. For more facts about reverse mortgage issues, please contact one of our licensed experts at (800) 401-8114.
What is a Reverse Mortgage?
A reverse mortgage, or HECM, is a government-insured loan program which allows homeowners 62 and older to access the value of their homes’ equity.
What Does HECM Stand For?
HECM stands for Home Equity Conversion Mortgage, and is the only type of reverse mortgage insured by the Federal Housing Administration.
Who is Eligible for a Reverse Mortgage?
Homeowners at least 62 years of age with moderate to significant equity in their homes who want to eliminate existing mortgage payments or receive additional cash.
Does the Loan Limit Cash-Out Use?
This is one of the most commonly asked concerns in the entire reverse mortgage FAQ. The answer is no. Once the previous mortgage is paid, you can use the money for monthly bills, medical expenses, home renovations—anything you want!
Do Both Spouses Need to be 62?
No. Only one borrower needs to be 62, but loan proceeds are based on the younger homeowner’s age.
I Still Have a Mortgage. Can I Take Out a Reverse Mortgage?
Absolutely—the existing mortgage is paid at closing, and then you receive any remaining cash. You no longer have monthly mortgage payments, although as the homeowner you’re responsible for insurance, property taxes, and maintaining the property.
Do Some Homes Not Qualify for a Reverse Mortgage?
Vacation homes, secondary residences, and rental properties of more than four units do not qualify for a reverse mortgage. To refinance such properties we recommend contacting our affiliate, Quicken Loans.
What Upfront Costs Come with the Loan?
Most costs are financed as part of the loan. You pay the counseling fee and an upfront appraisal deposit.
How is the Loan Repaid?
When the loan comes due, you (or your estate) pay all cash advances, upfront costs, and additional interest.
Can I Owe More than the House is Worth?
A reverse mortgage is a non-recourse loan, meaning the original owner never owes more than the home is worth.
When does the Loan Come Due?
The loan is due and payable when the last remaining borrower sells the property, permanently leaves the home, or passes away.
Got a question not covered in our Reverse Mortgage FAQ? Contact one of our licensed experts and they’ll give you the facts about reverse mortgage agreements.