How Does a Reverse Mortgage Work

How Does a Reverse Mortgage Work?

Is a Reverse Mortgage Right For You?

There are many factors to consider before deciding whether a reverse mortgage loan is right for you. The information below will describe just how a reverse mortgage loan works and will outline the steps needed to access your home’s equity. 

To assist in the process of determining your eligibility and whether a reverse mortgage loan is the right choice, you can meet with one of our HECM mortgage experts to discuss program eligibility requirements, financial implications, and all your options.

Your HECM mortgage expert will also discuss provisions for the mortgage becoming due and payable. After this meeting,  you should be able to make an independent, informed decision of whether a reverse mortgage is right for you.

Call 515-343-2300 today and schedule your reverse mortgage assessment!

There are borrower and property eligibility requirements that must be met to qualify for a reverse mortgage loan. You can refer to the list below or simply use our reverse mortgage calculator to help you determine if you qualify.

If you meet the eligibility criteria, you can complete a reverse mortgage application by contacting us TODAY at 515-343-2300. 

Borrower Requirements
Below are the basic eligibility requirements:
  • The youngest borrower on title must be 62 years of age or older
  • Own the property outright or have considerable equity in the home
  • Occupy the property as your principal residence
  • Receive counseling from a HUD- approved reverse mortgage counselor
  • Meet financial eligibility criteria as established by HUD.

Property Requirements
The following eligible property types must also meet all FHA property standards and flood requirements:
  • Single family home or 2-4 unit home with one unit occupied by the borrower
  • HUD-approved condominium project
  • Manufactured home that meets FHA requirements
HECM Features and Benefits
The amount of money you can receive is based on the age of the youngest borrower, prevailing interest rates and the lesser of the appraised value of the home, sale price or maximum lending limit. You may need to set aside additional funds from loan proceeds to pay for taxes and insurance.

No monthly mortgage payments are required. However, the borrower must continue to occupy the home their primary residence, pay property taxes and insurance, and maintain the home according to FHA guidelines. Failure to meet these requirements can trigger a loan default that may result in foreclosure. Interest and fees are added to the principal balance each month, resulting in a rising loan balance over time.

Borrowers may remain in the home indefinitely, even if the loan balance becomes greater than the value of the home – so long as the borrower meets the loan obligations.

Because HECM’s are non-recourse loans, you or your heirs will never owe more than the lesser of the value of the home or the loan balance, provided the home is sold to repay the loan.

Borrowers pay an initial mortgage insurance premium (MIP) at closing which is 2% of the home value not to exceed $12,723, as well as an annual premium of .5% of the outstanding mortgage balance. The mortgage insurance premium protects the borrower by ensuring they continue to receive their loan proceeds even
in the event that the lender becomes insolvent.New Paragraph
Legal Stuff: All Right Size Homes and Loans Reverse Mortgage Calculator and content included on this page and on this website are for borrower convenience only. Results using the online calculator are loan estimates, and terms produced by the calculator may not be presently available credit terms. All Reverse Mortgage will endeavor to maintain current information and a fully functioning calculator for customer use at all times, but cannot guarantee terms available or that system malfunctions will never occur. To receive an actual proposal or available programs, rates and terms, you must contact our office. Interest rates (fixed rate and adjustable rate, LIBOR index) and amortization, mortgage insurance premiums (MIP), origination fees, lender margins, payment options and closing costs may vary. Borrowers with reverse mortgages must continue to pay all property charges such as property taxes, hazard insurance and HOA dues (if any). Please contact our office to determine eligibility

We believe in providing outstanding products and efficient processes with the most knowledgeable people who conduct business in a professional manner with the highest level of integrity and total transparency.
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