What Is A Reverse Mortgage?

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What Is A Reverse Mortgage?

Let’s start with the basics. In this article, we are specifically focusing on Reverse Mortgages, or HECM (Home Equity Conversion Mortgages)

What is a Reverse Mortgage?

Unlike a traditional home equity loan, such as an FHA or refinance loan that you begin paying back soon after your loan closes, a HECM doesn’t have to be repaid until you leave your home.* In addition to having no monthly mortgage payments, you will receive tax-free proceeds from your HECM loan, and you can designate how you want to receive them. HECM loans were specifically designed to help those 62 and older supplement their retirement.

*You must continue to maintain your property. pay property taxes and homeowners insurance, and otherwise comply with all loan terms.

Just to reiterate:

Borrower receives proceeds in lump sum, line of credit, monthly payments or combinationFHA insured, non-recourse loanRepayment is deferred- No monthly mortgage paymentsAvailable as purchaseAmount available is based on age, interest rate, home value (up to $687,650) and a factor set by the FHA.

It’s specifically designed to help those 62 or older leverage the equity in their home and utilize it for their financial benefit.

What are the qualifications?

The oldest borrower on title must be 62 years of age or older. A non-borrowing spouse may be under 62 (depending on loan program).The home must be the borrower’s primary residenceThe home equity must exceed 40% in most cases, depending upon the borrower’s age (also depending on loan program)The borrowers will undergo a financial review to ensure they are able to comply with the loan terms.In some cases borrowers must attend reverse counseling

A HECM loan can be an extremely smart strategy for retirement security. How?

Replace cash reservesEliminate monthly mortgage payments* and help increase cash flow for you! Provides a new way to diversify wealth Enchance financial security without affecting other benefits such as Social Security or Medicade Delay drawing from Social Security Payments or Pensions Can help cover unexpected gaps in medical coverage

A Home Equity Conversation Mortgage is an incredible resource for those who are eligible and a variety of ways to do so. At Geneva, we take pride in having Certified Reverse Mortgage Specialists able to assist you and guide you through the right strategy for you.

Reach out to us today to see how you could benefit from a reverse mortgage.



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Nominated for Loan Officer of the Year by ASREB in 2017 and a Mortgage Loan Officer since 2013, Shane holds more than 30 years of customer sales and service career experience, Gilbert-based Shane Christopher serves as a Mortgage Advisor with Geneva Financial. He is renowned—and respected—for a hometown attitude of service with a smile and treating clients like family.