A: A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD's reverse mortgage provides these benefits, and it is federally-insured as well.

A: To be eligible for a HUD reverse mortgage, HUD's Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own your home outright, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home. You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan. You can contact the Housing Counseling Clearinghouse on 1-800-569-4287 to obtain the name and telephone number of a HUD-approved counseling agency and a list of FHA approved lenders within your area.

A: Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan.

A: Your home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved. It is possible for individual condominiums units to qualify under the Spot Loan program.

A: With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

A: No! You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home's value.

A: When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs. None of your other assets will be affected by HUD's reverse mortgage loan. This debt will never be passed along to the estate or heirs.

A: The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

A: I've been contacted by a firm that will give me the name of a lender for a "small percentage" of the loan? HUD does NOT recommend using an estate planning service, or any service that charges a fee just for referring a borrower to a lender! HUD provides this information without cost, and HUD-approved housing counseling agencies are available for free, or at minimal cost, to provide information, counseling, and free referral to a list of HUD-approved lenders. Call 1-800-569-4287, toll-free, for the name and location of a HUD-approved housing counseling agency near you.

A: You have five options:

• Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term - equal monthly payments for a fixed period of months selected.
• Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower's choosing until the line of credit is exhausted.
• Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
• Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower

A: No. In fact, there are several  types of reverse mortgages
that can affect the cost of the loan, the total amount of the loan, and even how you're able to spend the money you receive. Your Reverse Mortgage specialist understands all the rules for each, and can help you determine which type would be most beneficial for you.

A: Before getting a Reverse Mortgage, you will first have the opportunity to meet with an independent Reverse Mortgage counselor, face to face or over the phone, at no cost to you, to discuss your available financial options. This counselor will discuss all of your financial options, including Reverse Mortgage.   If a Reverse Mortgage is right for you, he or she will help you determine which type of Reverse Mortgage fits your needs.

A: Your Reverse Mortgage counselor will discuss the costs involved in obtaining a Reverse Mortgage, but most fees and costs are ‘financed’ with the loan, meaning that the amount you would pay for things like the Origination fee, Mortgage Insurance Premium, and so on are treated as money that you borrow against the Reverse Mortgage.  Typically, Reverse Mortgage recipients only pay upfront for a small processing fee, a credit check, and a home inspection. 

A: Absolutely - as long as your equity is greater than the amount you still owe. If you currently owe money on your home, your Reverse Mortgage will pay off the balance; as part of this, you will never have a mortgage payment for as long as you stay in your home! Otherwise, you can either pay off the old debt before you get a reverse mortgage, or you can use the initial proceeds from the reverse mortgage to pay the debt.

A: Absolutely not. With a reverse mortgage - you still own your home. Of course, that means you must continue to pay your property taxes, make necessary repairs to the home, and keep home-owner's insurance.  The title stays in your name for as long as you want.

A: No. A reverse mortgage is what is called a non-recourse loan. This means the bank can never come after any person or estate for repayment of the loan. The bank can only use the value of the home as repayment.

A: During your loan period, there may be restrictions for:

• Renting out your home
• Adding new owners to the home's title
• Changing your home's zoning classification, or
• Taking out new debt against your home

Your Reverse Mortgage counselor will go over all such restrictions during your counseling session, making sure that you meet all qualifications, and reviewing alternative financial options if you do not.

A: Relax - even after you close your Reverse Mortgage – that is, after all the paper work is signed and you have agreed to the terms of the loan - you still a chance to reconsider. Should you decide for any reason that you no longer want the loan, you have three days to cancel.  You will not be pressured into accepting the Reverse Mortgage. 

A: Some potential reverse mortgage candidates are concerned they will have less home equity to leave their heirs – that is, until they actually speak with their heirs! 
Many adult children want to see their parents living comfortably and enjoying their retirement rather than struggling just to leave something behind. Besides, a reverse mortgage can actually grant seniors the freedom to help their children and grandchildren with expenses while they are still alive to see them enjoy it. And don't forget: your heirs will still receive the remaining equity on your home after the Reverse Mortgage is repaid.

A: Requesting a free information kit and DVD fromSeniors Equity Conversion  is a great place to start, and when you order we’ll refer you to a qualified, experienced Reverse Mortgage counselor in your area.   Your counselor will helpfully and honestly explain the ins and outs of a Reverse Mortgage, and will help you through the process.