A reverse mortgage is a Home Equity Conversion Mortgage (HECM) loan, a loan insured by the U.S. government. This useful loan option is designed to help homeowners and homebuyers age 62 and older convert some of their home equity into cash - so they can live more comfortably, with greater financial independence. Built into this financial tool are several important features and safeguards, for your security and peace of mind:
A reverse mortgage does not have to be repaid until you sell or no longer live in your home. As the homeowner, you just need to remain current with hazard insurance and property tax payments, and maintain the condition of the home.
A reverse morthage may help you plan for a more comfortable retirement, lived with greater financial independence. We always encourage you to involve family members in your decision process - so you can make the choice that's right for you
After the loan is repaid, any remaining equity belongs to you or your heirs. Also, the HECM reverse mortgage is insured by the Federal Housing Administration (FHA), making it a 'non-recourse' loan. This means that you can never owe more than the value of your home at the time you or your heirs sell your home to repay your reverse mortgage.
To ensure that you fully understand all aspects of a reverse mortgage, you will attend a counseling session with an independent counselor who's approved by the U.S. Department of Housing and Urban Development (HUD). This will occur either in person or or over the phone and usually takes 60 - 90 minutes.
Per HUD Mortgagee Letter 2014-10, "This material is not from HUD or FHA and has not been approved by HUD or a government agency."