Expert Reverse Mortgage Information

Reverse mortgages are FHA insured up to a limit, for 2024, of $1,149,825. For people who live in states with very high real estate prices, a jumbo reverse mortgage can help you unlock equity up to $5,000,000. Jumbo reverse mortgages are not FHA insured. The minimum reverse mortgage age is 62; every borrower on the loan must be at least this age. You are not required to make payments on your reverse mortgage, but you do have to continue to pay all required property taxes, homeowners insurance, and HOA fees due.

The minimum reverse mortgage age is 62 for all borrowers, but there are protections for younger spouses of borrowers. These protections prevent the loan from coming due upon the death of the older borrower.

When you take a reverse mortgage, you usually don’t have to make any mortgage payments. As long as you continue to pay all required property taxes, homeowners insurance premiums, and HOA dues, you will keep 100% ownership of your house, and you can stay in it as long as you like. If you pass away with an outstanding balance on your loan, your heirs will have an opportunity to sell the home and keep any amount above the loan balance. One of the great benefits of a reverse mortgage is that your heirs are never responsible for any shortfall; if for some reason your home sells for less than the reverse mortgage, they do not have to pay off the difference.

The most notable con of a reverse mortgage is that your heirs will have to repay the loan when you pass away. They will have 30 days to either pay off the reverse mortgage, or sell the house. It may be possible to extend this deadline. In essence, you are consuming the equity in your home, so when your heirs sell your home at your passing, they will receive a smaller inheritance.

You also have to pay attention to fees, most of which are paid up front and are added onto the reverse mortgage balance. Another con is that any interest you pay on a reverse mortgage can’t be deducted on your taxes like a regular home loan, although you can deduct the total interest paid if you pay the loan off in full.

How much of my home equity can I access?

The total amount you can fund depends on the appraised value of your home, how much, if any, you owe on your first and second mortgages, and your age. To find out more, please download our free information kit, or give us a call.

You must live in the home you’re taking the reverse mortgage on, and it must be your primary residence. You must own the home and have at least 50% equity in the home. You must also meet with a Department of Housing and Urban Development (HUD) reverse mortgage counselor before you can receive one of these loans. The purpose of this meeting is to make sure you understand how the loan works and to confirm that it’s a good fit for you.

Besides these program-wide requirements, there are various other requirements that may differ from bank to bank, but you can expect to need an appraisal, complete an application, and provide various documentation. However, these loans are easier to qualify for than traditional mortgages, so having good credit is not as important as having the minimum required equity in your home.

Refinancing a reverse mortgage might make sense if you can lower the interest rate, or move to a fixed rate from a variable rate. Another reason people refinance a reverse mortgage is to add a younger spouse. If your spouse didn’t meet the reverse mortgage age requirements when you first obtained the loan, but they’re now old enough, you can add them to the loan as part of a refinance.

Of course, another reason to refinance would be to cash in equity that’s built up since you first took out your reverse mortgage. This could be especially true in today’s real estate market. Refinancing an old reverse mortgage could unlock tens or hundreds of thousands of dollars in new equity, and give you even more cash flow for your retirement.