2. Am I eligible for a HUD reverse mortgage?

To be eligible for a HUD reverse mortgage with a reverse mortgage lender, the FHA requires that the borrower is a property owner, over sixty-two years old; owns the property outright, or has a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan.  The reverse mortgage lender will also require that the homeowner lives in the property as their primary residence.  You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan. Give the HCC a call Housing Counseling Clearinghouse on 1-800-569-4287 to help locate an FHA approved reverse mortgage lenders in your neighborhood.

3. Can I apply if I for a reverse mortgage loan didn’t buy my present house with FHA mortgage insurance?

Sure. While your property must meet HUD minimum property standards, it doesn’t matter if you didn’t buy it with an FHA-insured mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan.

4. What types of properties are eligible for a reverse mortgage?

Your property must be a single family dwelling or a two-to-four unit property that you own and live in. Also, condos, townhomes and other types of manufactured properties are eligible. Condos need to be FHA-approved for a reverse mortgage lender to approve. It is possible for Condos to qualify under the Spot Loan program. The property must be in reasonable condition, and must meet HUD minimum property standards. In some cases, property repairs can be made after the closing of a reverse mortgage.

5. What’s the difference between a reverse mortgage and a bank property equity loan?

Traditionally, a second mortgage, or a property equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your household income. The amount you can borrow from a reverse mortgage lender depends on your age, the current interest rate, other loan fees, and the appraised value of your property or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your property is, the older you are, the lower the interest, the more you can borrow from the reverse mortgage lender. You don’t make payments, because the loan is not due as long as the house is your principal residence. Like all property owners, you still are required to pay taxes, normal utilities, but the advantage of a reverse mortgage from a reverse mortgage lender is that the home can't be oreclosed due to a past due or missed mortgage payment.

6. Can the lender take my property away if I outlive the loan?

No! Nor is the loan due. You do not need to pay back the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your property’s value.

7. Will I still have an estate that I can leave to my heirs?

When you sell your property or no longer use it for your primary residence, you or your estate will pay back the cash you received from the reverse mortgage loan, plus interest and other fees, to the lender. The remaining equity in your property, if any, belongs to you or to your heirs. None of your other assets will be affected by HUD’s reverse mortgage loan. This debt will never be passed along to the estate or heirs.

8. How much money can I get from my property?

The amount you can borrow from a reverse mortgage lender depends on your age, the current interest rate, other loan fees and the appraised value of your property or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your property is, the older you are, the lower the interest, the more you can borrow.

9. Should I use an estate planning service to find a reverse mortgage?

I’ve been contacted by a firm that will give me the name of a lender for a “small percentage” of the loan? HUD does NOT recommend using an estate planning service, or any service that charges a fee just for referring a borrower to a lender! HUD provides this information without cost, and HUD-approved housing counseling agencies are available for free, or at minimal cost, to provide information, counseling, and free referral to a list of HUD-approved lenders. Before you agree to pay a fee for a simple referral, call 1-800-569-4287, toll-free, for the name and location of a HUD-approved housing counseling agency near you.

10. How do I receive my payments?

  There are 5 main ways to receive payments from a reverse mortgage lender

- Tenure -  The reverse mortgage lender will provide the borrower with monthly payments for as long as they live in the home.

- Term - The borrower receives equal monthly payments from the reverse mortgage lender for a fixed time period.

- Line of Credit - These types of payments can be scheduled differently when the borrower needs to access funds, or until the line of credit is exhausted.

- Modified Tenure - In reference to a reverse mortgage,  the reverse mortgage lender offers a line of credit as well as scheduled monthly payments for as long as the borrower remains in the property.

- Modified Term - In this scenario, the reverse mortgage lender offers a of line of credit with monthly payments for a fixed period of months as set by the borrower.

The best way to find a reverse mortgage lender is to compare mortgage lenders and find the best one for your specific situation..