Details of A Reverse Mortgage
“Home is where we start from.”
A Reverse Mortgage is a mortgage that allows a homeowner 62 or older to use the equity in your home to receive cash while continuing to own and live in it.
Reverse Mortgages are different from conventional home equity loans:
- No monthly mortgage or immediate repayments. (Borrowers are still responsible for abiding by the terms of the loan including paying property taxes and hazard insurance.) One may choose to make payments, offering more flexibility.
- Income or credit does not impact the interest rate
- Borrowers income and credit are used for a financial assessment to determine ability and willingness to pay property taxes, insurance, HOA dues if applicable
- Rather than making required monthly payments, the reverse mortgage loan balance is paid off when the home is no longer the primary residence of the borrower(s), other maturity triggers or if borrrower(s) fails to adhere to loan terms.
Types of Reverse Mortgages:
- FHA insured Home Equity Conversion Mortgage (HECM), regulated by a branch of the U.S. Department of Housing and Urban Development (HUD).
- The HECM was first insured by FHA in 1989 for the purpose of providing a valuable financing alternative for senior homeowners to help them remain in their home and have access to funds by withdrawing a portion of their home equity.
- Proprietary programs (programs owned by private or public companies)
- Single purpose reverse mortgages are offered by local governments for a single purpose such as repairs.
This website focuses on the FHA Home Equity Conversion Mortgage (HECM), referred to as a “reverse mortgage” throughout the website.
The reverse mortgage home loan programs available in Minnesota include:
- The HUD FHA government insured HECM (Home Equity Conversion Mortgage):
HECM Adjustable Rate (Monthly and Annually adjustable options)
- HECM Fixed Rate
- HECM for Home Purchase
Because we offer ALL reverse mortgage home loans available in Minnesota, we review all the options and help you determine which is the best reverse mortgage program for your situation. Click here to learn what others have said.
The HUD reverse mortgage program, the Home Equity Conversion Mortgage or HECM, has been the most common of reverse equity mortgage programs offering the lowest interest rate and the most flexibility. Currently it is the only available reverse mortgage program in Minnesota.
Click here to learn more about the Reverse Mortgage Products.
To become familiar with terms used in association with reverse mortgages visit our Reverse Mortgage Dictionary.
- You are a homeowner 62 years old or older
- Your home is your primary residence
- You have enough proceeds to pay off any current mortgages or liens, if there are any
- Your home meets HUD minimum property standards or can be brought up to their standards using the Reverse Mortgage proceeds
- Meet HUD’s Financial Assessment requirements for income and credit history for documenting their ability to pay property taxes and insurance into the future
- to use cash from your substantial equity now
- to stay in their home of many years
- to eliminate the current mortgage payments*
- funds for estate, financial, or long-term care planning
- to move to a smaller home, purchase a 2nd home or investment property without monthly mortgage payments
- cash to pay bills, fulfill dreams, or meet goals
- Retain ownership of home without the risk of losing it from not making mortgage payments – you don’t have to make monthly mortgage payments but you have to abide by the terms of the loan*
- Access immediate cash – generally not considered taxable income (consult tax advisor)
- Receive cash to be used for any purpose
- Receive a tenure or term monthly payment, a line of credit, a lump sum or a combination of these to meet your needs
- Ease financial worries and pressures
- Stay in home longer or purchase a new home without having monthly mortgage payments*.
- Maintain or raise current standard of living
- Use equity for long-term care planning
Look At The Features
- Instead of making monthly mortgage payments*, borrowers receive money in monthly payments, line of credit, lump sum, or a combination of these.
- The HECM is a FHA insured program.
- The loan amount depends on the age of the borrower(s), appraised value of the home or the mortgage lending limits (whichever is less), the current interest rate, and the program chosen.
- Loan origination and closing costs are generally financed by the loan other than the appraisal, possibly counseling and engineering inspections.
- Social Security and Medicare are not affected and generally not SSI or other public benefits. (consult with legal services for your situation)
- Available balance in line of credit grows so more funds are available in the future.
- No personal liability; borrowers or their estate are never required to pay more than the value of the home at the time of repayment.
- Equity remaining after the payment of the loan is the borrowers or their heirs.
- In the case of joint borrowers, when one of them dies, the mortgage stays in place as long as the other borrower has the home as their primary residence.
- Eligible Non-borrowing Spouse may qualify for a deferral period before the loan is due and payable.
- Borrowers are required to receive third-party counseling by a HUD approved counselor to help them determine if a Reverse Mortgage is right for them.
Frank and Emma were a vibrant 90 and 86 year old couple. They found that each month they were short money to even buy milk. Their son-in-law and daughter assisted them in obtaining the Reverse Mortgage. They are so pleased that they now can live more comfortably. They used the proceeds to receive a monthly payments to supplement their Social Security. They also took out a lump sum to fix up their home and left enough in their line of credit to use as future needs arise.
*Borrowers are responsible for property taxes, hazard insurance, maintaining property and abiding by terms of the loan or could face foreclosure.
Find out if a Reverse Mortgage would benefit you.
Reverse Mortgages SIDAC
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Minnesota Residents Call Us to learn how to receive a FREE copy of the reverse mortgage guide, Understanding Reverse Mortgages…Financing For Seniors May Be Right Under Their Roof, a book written in a simple format, providing the necessary information and knowledge to comprehend the basics of Reverse Mortgage.