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Reverse Mortgage Loans

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Reverse Mortgage (Home Equity Conversion Mortgage)

Fixed or Adjustable Terms

reverse mortgages A HECM (Home Equity Conversion Mortgage) is a special type of mortgage that enables homeowners age 62 or older to tap into the equity in their home. Unlike traditional home loans, no repayment of the HECM loan is required until they no longer occupy the home as their principal residence. At that time, the lender will declare the mortgage due and payable. What is borrowed plus interest is due to the lender, remaining equity remains with the estate.

Qualifying

  • Must be a minimum 62 years of age. Age of the youngest borrower determines eligibility.
    - Non-Borrowing Spouses under 62 are accounted for.

  • Max claim amount is the lesser of: - FHA Mortgage Limit ($636,150)
    - Appraised value
    - Purchase price

  • Expected Rate = Fixed Rate / Adjustable Margin + 10 Year SWAP

  • Generally, the lower the rate, the older the borrower is and the higher the value of the home, the more proceeds they qualify for.



BENEFITS

  • No monthly mortgage payment is ever required

  • Credit line growth rate
    - Unused available funds grow at the same rate as the interest being charged
    - Guaranteed regardless of equity position

  • Borrowers should look at home equity as asset allocation that is accessible

  • No pre-pay penalty – make payments if you want (I/O)

  • Funds are tax free

  • Homeowners keep all future appreciation, no equity sharing

  • Borrowers retain Title to the home

  • No limitations to how the borrower may use the funds


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