What Is a Reverse Mortgage?
At Crestico, we help homeowners understand their reverse mortgage options, compare available programs, and determine whether using home equity can support their financial goals.
How Does a Reverse Mortgage Work?
Depending on the program and the homeowner’s financial situation, funds may be available as a lump sum, monthly payments, a line of credit, or a combination of options.
The existing mortgage may also be paid off with proceeds from the reverse mortgage. The remaining available equity can then be accessed according to the terms of the loan.
The homeowner remains responsible for meeting the ongoing requirements of the loan, including property taxes, homeowners insurance, maintenance, and occupying the property as required.
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Check Eligibility
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Who Can Qualify for a Reverse Mortgage?
For an FHA insured Home Equity Conversion Mortgage, commonly known as a HECM, the borrower generally must be at least 62 years old and occupy the property as a primary residence.
Other reverse mortgage programs may have different eligibility requirements. A financial assessment is also used to determine whether the borrower can meet ongoing property related obligations.
Reverse Mortgage Property Requirements
Eligible properties for an FHA HECM can include certain single family homes, eligible condominiums, manufactured homes, and properties with up to four units when the borrower occupies one of the units as a primary residence.
Property eligibility can vary by program, so homeowners should review the property requirements before applying.
What Can You Use a Reverse Mortgage For?
Common uses include:
Reverse Mortgage Payment Options
Lump Sum
Monthly Payments
Line of Credit
Reverse Mortgage Counseling and Consumer Protections
Counseling is designed to help homeowners understand how the reverse mortgage works, the financial obligations involved, available alternatives, and how the loan may affect their financial situation and heirs.
These protections are an important part of making an informed reverse mortgage decision.
Is a Reverse Mortgage Right for You?
It can be particularly relevant for homeowners who want to eliminate an existing mortgage payment, supplement retirement resources, establish a line of credit, or access funds for major expenses.
However, a reverse mortgage is not the right solution for everyone. The costs, loan balance, impact on home equity, property obligations, and potential effect on heirs should all be considered before proceeding.
Crestico can help you review your available options and determine whether a reverse mortgage fits your financial objectives.
