Parish House Resources

Basics of a Reverse Mortgages
Seventy-six thousand, eight hundred and two American seniors have received an FHA HUD reverse mortgage in 2006. They simply decided it was the best way to increase their peace of mind and enjoy a better quality of life without selling their homes. Even so, you should carefully study the below information on reverse mortgages to see if this would be an option for you.
Benefits
You will retrieve all the equity you have in your home as a one-time lump sum of cash, monthly payments, or a line of credit. You will never need to repay the reverse mortgage as long as you live in the home.

Your existing mortgage (if you in fact have one) will be fully paid off. The disbursements will be tax-free and can be spent however you chose to do so with no impact to your Social Security or Medicare benefits.

Eligibility
In order for one to qualify, the homeowner must be at least 62 or older. Furthermore, the recommendation that you have paid off at least 40% or more of your mortgage. Finally, you should plan to stay in your home for many years to come. This type of loan has no income or credit requirements.

Cost

The cost of an FHA HUD reverse mortgage (HECM) is much lower than buying and moving to a new home. Interest rates will usually be lower than the best rates on a traditional mortgage. Costs will be packaged into the reverse mortgage so you rarely have out-of-pocket expenses.

Liability of Estate
Your heirs will never be personally liable for the reverse mortgage since it is secured solely by the equity in the home. Your heirs can still inherit the property and have the option to sell it or to refinance with a traditional mortgage company.
Repayment
Once a reverse mortgage loan has been completed you owe nothing as long as one homeowner lives in the home. In addition, the FHA mortgage insurance will ensure that you can never owe more than the sale price of your home, even if the home depreciates.

When you have moved out of the home, your estate will have up to 12 months to repay the loan (usually by selling). If the home does sells for more than the loan balance, the remaining equity will pass to your heirs.