A reverse mortgage loan is a safe and secure financial product that allows homeowners 62 years of age or older to access equity in their homes without taking on additional monthly payments.
The most common type of reverse mortgage is the Home Equity Conversion Mortgage (HECM), insured by the Federal Housing Administration (FHA). This is what we offer at Mutual of Omaha Mortgage.
The HECM reverse mortgage is like a traditional mortgage, but instead of making monthly payments to a lender, it allows seniors to receive payments from the lender in the form of a lump sum, a line of credit, monthly payments, or a combination of the three. It is not just a one-size-fits-all solution.
How does a reverse mortgage work?
A reverse mortgage converts a portion of your home’s equity into funds paid directly to you. Typical amounts range from 40 percent to 60 percent of the home’s value.
You can get a variable or a fixed rate. The variable rate gives you more options for how to receive your money. A fixed interest rate means you can only receive your funds in a one-time lump sum payment.
How are reverse mortgage funds disbursed?
There is a waiting period after the closing documents are signed before funds can be disbursed. The loan pays off the current mortgage, if there is one. Then, you will start receiving your funds according to the method you chose on the application.
The borrowers are not required to pay back the loan until they sell the home, move out of the home for more than 12 months, or pass away.
What is a reverse mortgage used for?
There are no rules about how the funds from a reverse mortgage loan may be used. You can use the money as you see fit.
What are the reverse mortgage loan requirements?
An HECM reverse mortgage has very specific requirements that must be met in order to qualify.
Talk to a reverse mortgage advisor about your unique situation.
How do I apply for a reverse mortgage?
If you apply for a reverse mortgage loan, this is an overall process that you can expect:
- Meet with a reverse mortgage advisor
- Complete a counseling session
- Submit and process your application
- Funds disbursement
What’s the bottom line?
In summary, a reverse mortgage is a financial product that allows seniors to access equity in their home and receive payments from the lender while still living in their home.
Carefully consider your options and seek advice from a professional to discover the best option for your financial situation.
This information is general and educational in nature and should not be construed as financial advice. Consult your financial advisor before implementing financial strategies for your retirement.
Tiffany is a Reverse Mortgage Loan Specialist, NMLA# 139062, with Mutual of Omaha Reverse Mortgage, serving PA and NJ. She is a 25-year loan officer, concentrating solely on FHA Insured reverse mortgage. She lives in Catasauqua, is married to Mike, with 26-year-old son, Mikey, 34-year-old daughter, Lindsay, and 5-year-old grandson, Cameron.