The U.S. Department of Housing and Urban Development (HUD) created the HUD reverse mortgage in 1989. HUD's Senior Mortgage is a federally-insured private loan. It's a safe program that can give seniors greater financial security. The reverse mortgage can be used to supplement social security, medical expenses, home improvements, and pay off debt.
A senior's home might be their largest single investment, seniors deserve to know more about HUD reverse mortgage, and decide if has the value and benefits that they are looking for.
A HUD 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 making mortgage payments can be paid back to a senior. Unlike a traditional mortgage, no monthly payment is required as long as the seniors continues to live as the house. HUD's federally-insured reverse mortgage programs provide these benefits.
Senior Homeowners 62 and Older May Be Eligible
HUD's Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own and live in the home and the mortgage balance must paid off with proceeds from the senior mortgage. A senior must have counseling from a HUD approved agency prior to applying for a HUD reverse mortgage loan.
Your home must be a single family dwelling or a two-to-four unit property that the senior owns and occupies. Detached homes, Townhouses, and manufactured homes built after July 1976 are eligible. Condominiums must be FHA-approved.
Reverse Mortgage is Different than a bank home equity loan.
With a traditional second mortgage or HELOC, the senior must have sufficient income to debt ratio to qualify for the loan, and is required to make monthly mortgage payments. The HUD reverse mortgage is different in that it pays the senior, and there is no income requirement for the reverse mortgage.
The senior doesn't make payments, because the loan is not due until the home is no longer the principal residence. Like all homeowners, the senior must still pay their real estate taxes, insurance and utilities. The FHA-insured HUD Reverse Mortgage protects seniors from being foreclosed or forced to vacate their house because of a missed mortgage payment.
The Senior Can Stay in Their Home for the Rest of Their Lives.
There is no need to repay the senior mortgage as long as one of the borrowers continues to reside in the home and maintains paying their taxes and insurance. A senior will never owe more than your home's value, and be allowed to stay in their home as long as they want.
A Senior Can Leave an Estate to Their Heirs.
When the last surviving borrower dies, or moves away from the home, the remaining equity in your home, belongs to the senior or their heirs. The home is the only asset that can be tied to this loan, so this debt will never be passed along to the estate or heirs.
Seniors Can Access Equity in Their Homes
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's senior mortgage lending 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.
Don't Count On an Estate Planning Service to Find a Reverse Mortgage
HUD does NOT recommend using an estate planning service, or any service that charges a fee just for referring a borrower to a lender! Contact a senior mortgage lender who is a member of the National Reverse Mortgage Lenders Association directly.
HUD Reverse Mortgage Options
Senior Mortgages Benefit Options: