Question 1

What is a Reverse Mortgage (HECM)?

Accepted Answer

A Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage, insured by the FHA. It allows homeowners aged 62 and older to borrow against the equity in their home. Unlike a traditional mortgage, you don't make monthly loan payments. Instead, the loan balance grows over time, and the loan is repaid when you sell the home, move out permanently, or pass away.

Question 2

Why do I have to be 62 years old?

Accepted Answer

Federal regulations for FHA HECM loans mandate that the youngest borrower on the title must be at least 62 years old. Because the loan is designed to be repaid only after the borrower no longer lives in the home, the age requirement ensures life expectancy math balances out for the lender and the FHA insurance fund.

Question 3

What happens to my existing mortgage?

Accepted Answer

If you have a traditional forward mortgage, the funds from a reverse mortgage *must* be used to pay off that existing balance first. Any remaining funds (the 'Net Available' in our calculator) can be accessed as a lump sum, a line of credit, or monthly tenure payments.

Question 4

Can the bank take my home?

Accepted Answer

In a standard HECM, you retain the title to your home. The bank places a lien on the property, just like a normal mortgage. However, you must continue to pay property taxes, homeowners insurance, and maintain the property. If you fail to do so, the loan can be called due, which could lead to foreclosure.

Question 5

What happens when I pass away?

Accepted Answer

Your heirs will receive a notice when you pass. They generally have a few options: sell the home and keep any remaining equity, refinance the home to pay off the reverse mortgage balance and keep the property, or sign a deed-in-lieu of foreclosure. Because HECMs are 'non-recourse' loans, if the home is underwater, your heirs will never owe more than the home is actually worth.

Question 6

What is the FHA lending limit?

Accepted Answer

The FHA caps the maximum claim amount (home value) they will insure. For 2024, this limit is $1,149,825. If your home is worth $2 million, the reverse mortgage mathematical formula treats it as if it is worth $1,149,825. If you need larger payouts on high-value homes, you would need to seek out proprietary 'Jumbo' reverse mortgages outside the FHA program.

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