How Does A Reverse Mortgage Work
It starts by eliminating any existing monthly mortgage payments.
Remaining money is then available in any one of these flexible disbursement options.
- One-time, tax-free payment*
- Steady, tax-free monthly payments*
- Cash reserve credit line that is guaranteed to grow
- Any combination of these methods
How you receive the money is up to you.
Depending on your situation, having extra money at hand could mean:
- Help with ever-rising healthcare costs
- Help staying in your home, where you're most comfortable, without the pressure of a monthly mortgage payment, and money to help pay for in-home care if someday needed
- Help with property taxes, home repairs and upkeep- whatever you decide.
You continue to own and control your home while at least one borrower lives there, pays insurance and taxes, and maintains it.
- The loan is due only after the final borrower no longer lives in the home.
- Your heirs still inherit the home, and they decide how to repay the reverse mortgage.
- And FHA mortgage insurance protects your heirs and estate by guaranteeing that no matter what happens in the housing market, the repayment amount is never higher than the home's final value.
What Happens When the Loan Ends?
As with any other mortgage you can:
- Repay the loan and keep the house
- Sell the house, repay the balance and keep remaining equity
- Deed the home to the lender, if the loan balance exceeds the home's value. No repayment beyond the home's value is required.
Or, unique to HECM, you can: