A reverse mortgage is a United States Federal Housing Administration (“FHA”) loan for those borrowers who are 62 years old and older. Unlike a regular FHA and conventional mortgage, the borrower is not obligated to make monthly mortgage payments on the loan. The borrower will either get a lump sum of money at closing or a line of credit. The line of credit will be available to the borrower to make cash withdrawals from at any time. A reverse mortgage is a great tool for borrowers 62 years of age and older who have equity in their property and would like to subsidize their retirement income or improve their quality of life.
- One of the borrowers must be 62 years of age or older.
- Younger spouses can also be included as a borrower on the reverse mortgage but the loan amount decreases based upon the youngest applicant.
- No payments are ever required until all borrowers are deceased or leave the property.
- Borrowers must still pay the property taxes and homeowners insurance and properly maintain the property.
- Once the last borrower is deceased the loan/note is due and typically the heirs have six months to sell the property or pay off the loan.
- Single family, 2-4 units, townhomes and condominiums are eligible.
- Perfect credit in not required but challenged credit may have additional requirements.
- Existing mortgages are required to be satisfied and the remaining amount may be received as cash.
- Proceeds from a reverse mortgage are the same as cash and have no restrictions.
- Typically there is no prepayment penalty on the loan.
- Borrowers must occupy the home.
- Loan is non-recourse and your estate is not liable if you owe more than your home is worth.
- A reverse mortgage may also be used to purchase a home
- The lender does not own your home, this a mortgage and is not due until the last borrower is deceased or you leave the home for more than one year.
Contact duPont Mortgage to determine if this program is right for you. There are different options that a reverse mortgage can offer but you need to make sure that a reverse mortgage accomplishes your short and long term plans.