Reverse Mortgage

...FHA Insured Reverse Mortgage Loan Experts

Is a Reverse Mortgage right for you?

A Reverse Mortgage, also know as an FHA Home Equity Conversion Mortgage (HECM), is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.

However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage loan terms.

You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, have the financial resources to pay ongoing property charges including taxes and insurance, and you must live in the home. You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan.

You may apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage.

When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid. All proceeds beyond the amount owed belong to you, your spouse or estate. This means any remaining equity can be transferred to heirs. No debt is passed along to the estate or heirs.

The amount you can borrow varies by borrower and depends on: the age of the youngest borrower or eligible non-borrowing spouse; current interest rates; and the lesser of appraised value or the HECM FHA mortgage limit of $625,500 or the sales price.

If there is more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower is used to determine the amount you can borrow.

  • Reverse Mortgage FAQ’s

    What is a Reverse Mortgage?

    A reverse mortgage is a loan product that allows senior homeowners to convert home equity into cash. Most reverse mortgages are provided by the Federal Housing Administration (FHA), as part of its Home Equity Conversion Mortgage (HECM) program.

    How does a Reverse Mortgage work?

    With a reverse mortgage, you receive money from your mortgage company as a loan secured against the equity in your home. The money is paid to you in a lump sum, through a line of credit, or as monthly payments. Fees and interest are charged on the loan amount (or “loan proceeds”); therefore, over time the loan balance increases and your home equity decreases.

    What are the Benefits of a Reverse Mortgage?

    A reverse mortgage lets you use the value of your home to provide a source of income while allowing you to stay in the home. It may be an effective way to benefit from the money you’ve invested in your home over the years.

    What are the Obligations with a Reverse Mortgage?

    Having a reverse mortgage, you are required to:

    • Pay your property-related expenses on time. Property-related expenses include: real estate (property) taxes; utilities; homeowner’s (sometimes referred to as “HOA” fees) and/or condo association dues; homeowner’s insurance (also referred to as “hazard” insurance); and flood insurance premiums (if applicable).
    • Maintain the property’s condition. You must maintain the condition of your home at the same quality as it was kept at the time you took out the reverse mortgage loan.
    • Live in the property as your primary residence. You are required to certify this on an annual basis.
    • Comply with all the required loan terms.

     

    Can I leave my home with a Reverse Mortgage to my heirs?

    Yes. Your estate or designated heirs may retain the property and satisfy the reverse mortgage debt by paying the lesser of the mortgage balance or 95% of the then-current appraised value of the home.

    As to HECM Loans, Atlantic Financial, Inc. arranges loans with third-party providers and will not make any mortgage loan commitments or fund any mortgage loans under the reverse mortgage program

  • Payment Plans Include:

    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 an amount of your choosing until the line of credit is exhausted.


    Modified Tenure

    – combination of line of credit and scheduled monthly payments for as long as you remain in the home.


    Modified Term

    – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower. For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.


    Single Disbursement Lump Sum

    – a single lump sum disbursement at mortgage closing.