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Know Your MortgageSo you’ve been reading these “Know Your Mortgage” posts for a while now (humor me, internet) and you feel pretty confident with your discoveries so far. The mortgage process once was a labyrinth of information, but with the help of these blogs you’ve made the right turns to get out alive (bear with me). However, just when you think you’ve got a firm grasp on a situation the proverbial Minotaur in the labyrinth appears to turn everything on its head. What turned my head askew was the concept of a reverse mortgage. After I’ve learned so much about different types of home loans, you’re telling me they can go backwards now? Just unfair if you ask me, but reverse mortgages are very helpful for those who qualify. So let us venture onward into the world of reverse mortgages.

Alright, What Exactly Do You Mean by “Reverse Mortgage” ?

Well think of how a traditional mortgage works, fixed-rate or adjustable rate, and imagine the process backwards.

So…I Get Paid Money to Not Live In a House?

No, no, no. Okay, that was a bad set up. A reverse mortgage is also known as Home Equity Conversion Mortgage, or HECM, and it has a few requirements in order to qualify. It’s meant for older homeowners who may have troubles paying off a mortgage pre or post retirement. If an applicant is approved for a reverse mortgage, then their remaining payments on the house (if any) are wiped clean by their current equity. The only requirements for this are that the applicant(s) must be 62 or older, have the house their filing on be their primary residence, and they must have enough equity in the house to qualify.

Wait, What’s Equity?

It’s the “E” part of HECM, and it’s the difference between the current value of your home and how much you still owe for the property. You can raise the equity on your home by making home improvements, seeing if your house has risen in value over time, or just paying on your mortgage. If approved for a reverse mortgage, the applicant can get their equity back.

How So?

Well, we’re not there just yet. If you’re interested in a reverse mortgage and you qualify, you must get counseling about it from a government-approved agent beforehand. This is just for him or her to explain how the whole reverse mortgage program works, your responsibilities with it, and an estimate of your loan advances.

Also, there are costs that are paid to get the reverse mortgage set up; a mortgage insurance premium, origination fee, title insurance, a real estate appraisal and more. I can’t give an accurate cost for individual things or a total because I wouldn’t want to mislead, not to mention the prices will vary based on the home and where you live. Regardless, after that’s handled, you can get the money in one of four ways: a monthly payment, one lump sum, a line of credit, or any mix of the three mentioned.

So, You Just Have Like Unlimited Money After That?

No! It’s all coming from the previous equity you’ve built for you property. Remember, you stop paying on the mortgage once you start a reverse mortgage, so amount you owe will still continue to rise on the property. As a result, this will make your equity (possibly) shrink over time. Don’t be swayed though, there are a ton of benefits to a reverse mortgage. As mentioned before there are no more monthly mortgage payments, the house is still yours, and yours to give to your children or whomever in a will. You don’t even have to hit a required credit score or have a certain income bracket, and it’s insured by the federal government too.

When Does the Reverse Mortgage Get…Reverse Paid Off?

Beautifully put. When the loan is “done” (which can mean the house is sold, the owner moves or passes away amongst other things) the amount owed is whatever is cheaper between the home’s value or the current mortgage. From there the amount owed can be re-financed to keep the home, turned over to the lender, or sell the home and cash out the equity.

Sounds Fair Enough. Can I Apply for One Today?

Are you 62 or older?

I Don’t Know. You’re Writing These Questions.

Fair point; lets wrap this up before we get too meta.  As I said before, a reverse mortgage can help those who are older, have most or all of their house paid, and need money for other things. As always, post additional questions below if you have more burning questions about reverse mortgages.

If you think a reverse mortgage might be right for you, our friends at One Reverse Mortgage can help. If you would like to get started over the phone, one of their experts will be happy to speak with you at (888) 980-1543.

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This Post Has 59 Comments

  1. We would like a Reverse Mortgage expert to contact us for more information on a reverse mortgage, please. My husband is 75 and I am 67. Phone number is *** *** ****.

    1. I’m going to pass this along. I’m also going to do with your phone number and protect your privacy.

      Thanks,
      Kevin Graham

  2. My father is interested in a reverse mortgage. 72 and house is appraised at $1.3m. Mortgage $585,000. Could he qualify for this?

    Very interested,

    Julie

    1. Hi Julie:

      You can talk to our friends at One Reverse Mortgage and they will be able to go over his options. If you would prefer to start by speaking with them, their number is 800-401-8114. Hope this helps!

      Thanks,
      Kevin Graham

  3. Hi my husband is 70, I am 59. We have no mortgage. We need some repairs and upgrades to our house. Can we get a reverse mortgage because I am not 62?

    1. Hi Lisa:

      Since your husband is over 62, you should be able to look into it. I’m going to recommend you speak with one of our reverse mortgage experts at One Reverse Mortgage. You can also call (800) 401-8114.

      Thanks,
      Kevin Graham

  4. Just interested – Home value on last appraisal (6 months) 275000; mortgage balance 188000; don’t want to take a $ out of the home equity; just want to stop the monthly payments. I can pay the annual property taxes and home insurance out of own funds. Would I qualify for a reverse mortgage without it costing an arm and leg?

    1. Hi John:

      Our friends at One Reverse Mortgage can definitely help you look into your options. I do want to make very clear that a reverse mortgage is into a cash-out refi, but it does rely on the equity in your home. You are taking equity out of your home when you take the loan. However, it would eliminate the monthly payment minus taxes and insurance. You can get in touch with One Reverse Mortgage online or call 800-401-8114.

  5. We need to talk to someone about a reverse mortgage. Can someone please contact us. I am 69 .
    Thank- You! Steve Fleming

    1. Contact me at ********************. We are interested in reverse mortgage and nothing is owed on the house. I am 64 and my wife is 66. Property address is ************************************. Sincerely,Gerald D and Sue BeBeau.

      1. Hey Gerald:

        I’m going to remove your address and phone number for your privacy, but before I do that I’m going to pass it along to someone from our One Reverse Mortgage team to go over potential options with you.

        Thanks,
        Kevin Graham

  6. I have a home valued at (Zillow.com 33980) $211,000 and have a current 3 1/2% VA mortgage balance of $146,000. Do I have enough equity to have a Reverse Mortgage? There are other homes similar in my area for sale
    from $220,000 to $279,900 and I don’t have an actual appraisal on my property. Please let me know if I would qualify for the reverse mortgage.

    1. Hi Robert:

      I’m going to have someone from our One Reverse Mortgage team reach out to you about any options you might have. Look for an email.

      Thanks,
      Kevin Graham

  7. I want to talk with somebody on how to do a reverse mortgage on my house. I need more information.
    thank you
    Pat Everett

    1. Hi Pat:

      I’m going to have someone from our One Reverse Mortgage team reach out to you. They’ll be in touch.

      Thanks,
      Kevin Graham

  8. Can you please have someone contact me about the reverse mortgage? We would like to know more about it and see if we qualify. Thanks!!

  9. I will turn 62 in June and would like more info on reverse mtg. Ya’ll currently carry the note on my home. Thank you.

  10. Hello,
    My parents got an Home Equity Conversion Mortgage with Quicken 3-5 years ago and now they are both 88 years young an need to move to an assisted living situation. I need some help understanding what I need to help them with in this move. From what I understand there are certain steps necessary when they leave there residence and move to assisted living.

    Please have someone send me the contact information so I can get in the information necessary to help them in this transition.
    Thank You, Steve Richardson

    1. Hi Steve:

      Now that your parents are moving out, you have a few options in terms of dealing with the mortgage payoff. I’m going to pass your question along to someone from our One Reverse Mortgage team to help go over your options.

      Thanks,
      Kevin Graham

    1. Hi Bernadette:

      That depends on the application. I’m going to pass your comment to one of our Home Loan Experts to help you out.

      Thanks,
      Kevin Graham

  11. Just to clarify one issue, what is the minimum equity needed to qualify? Seems like at least 50% to me. Is that a fair assumption?

    1. Good morning, Bryce! Actually, it might depend on several variables, so we need a little more information to give you the best possible answer. I’m going to have a home loan expert reach out to you. They’ll send you and email to discuss your situation. Have a good week!

  12. I’m going to be 62 in September, what myself and my wife want from the reverse mortgages no long make any mortgage payments, we have no family to leave anything too, just want to leave out the rest off our life with no house worries (mortgage), What can I do

    1. Good morning, Gregg. I’m going to have Danny from One Reverse Mortgage reach out to you. He’ll be able to help you out with all reverse mortgage questions!

    1. Hi Stephen! I’ll have one of our reverse mortgage specialists reach out to you to answer any questions you may have.

  13. I am 70 yrs. young. I owe $61,000 on a home that is currently on the market for $360,000. Tax assessment is $281,500. I would like to understand what exactly a reverse mortgage would mean. I need allot of work done on the house, which is why no offers have come in. My ideal would be to upgrade the house and stay here. What can you tell me.

  14. what is the out of pocket expense to process the reverse mortgage loan? There have been improvements within the last eleven years, Replaced a grage, replaced a roof. Seeking grants to have needed repairs done.

  15. Have wondered whether an HECM would benefit us but would like additional info. Does the process begin with the government approved agent counseling? If yes, how do we get the ball rolling?

    We own our home 100% and are approaching age 80.

    Thank you.

    Sincerely,
    George

    1. Hi George! Thanks for reaching out! I’ve passed your question on to our team of mortgage experts who will reach out shortly.

  16. I have refinanced three times using Quicken but that option is no longer available due to insufficient retirement income. Will a reverse mortgage work in my situation enumerated below? I am 83 years old

    1. Hi James! Thanks for reaching out! I’ve passed your comment on to our reverse mortgage experts who can give you more info on your specific situation.

  17. I am thinking of a reverse mortgage but my question is do I have to come up with any money. My home was appraisaed at 190,000. I owe 87,000. I am 63 years old Thank You.

    1. Hi Kathleen! Thanks for reaching out! I’ve passed your comment on to our licensed reverse mortgage specialists, who can take a deeper look into your specific situation. They will be reaching out to you soon.

  18. I am convinced, but my wife is not ! We own our home totally outright, no mortgage. We are both in our 70 years young. I want to have the money available for a better life,not to penny pinch for some the better things in life. Maybe a small place in a warmer area for the winter months. We would like to have one of your experts contact us if possible. Phone ( 443-282-4409) thanks Jim . Email baxtoy@atlanticbb.net . Our home is 5 years old in Maryland’s EasternShorevalued at $265 k from appraisal.

  19. from a reader’s curiosity into different scenarios.

    scenario 1: trying to refi and giving a lump sum would be straight forward, but if you’re older than 62, you may not have enough income flow left over after paying the refi monthly to be comfortable.

    scenario 2 : as i think i understand it, in getting a reverse and getting a lump sum – if you don’t have a mortgage, you’ll be giving more than 50% to the other person. if your house is worth say $100 K, and you get a reverse, after fees, you’ll get less than $100 K and you’ll be giving $ 50 K. if you have a mortgage on the house, say $20 K, you’ll be getting MUCH less than $ 80 K ($100 K – 20 K and fees) and giving away $ 50 K. with the remaining balance you have, you’ll have to live on that and still maintain the house. if you pass on, the house will be sold and IF there’s any residual, it’ll be given to your heirs.

    scenario 3: the simplest – sell the property, give 50% and down size or rent.

    wondering about the taxes. if the other person is on title, would help to share the taxes.

    1. Hi Mike,
      We would need a little more information, but typically, if it is a spouse and they are going through a divorce it would really be
      something along the lines of a decree from the court saying that this is what can occur. If it is a son/daughter moving into a home that a family
      member has passed away and they have to split the assets with another sibling, then it becomes a little bit more tricky, the best thing to do
      would be to contact a reverse mortgage expert to discuss this as there are many different possible scenarios with the limited bit of information that
      we have. I’ll share your inquiry with one of our home loan experts at One Reverse Mortgage and they will contact you. Thanks, and have a great evening.

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