Instead of making payments to the lender, the lender pays you through:
Monthly payments
A lump sum
A line of credit
Or a combination of these
You keep ownership of your home. The loan is repaid when you sell, move out permanently, or pass away.
Basic requirements include:
Must be 62+ years old
Home must be your primary residence
Have enough equity in the home
Ability to maintain taxes, insurance, and upkeep
Complete HUD-approved counseling
Eligible properties include:
Single-family homes
FHA-approved condos
2–4 unit properties (one unit must be owner-occupied)
Manufactured homes meeting HUD standards
A reverse mortgage loan, like a traditional mortgage, allows homeowners to borrow money using their home as security for the loan. Also, like a conventional mortgage, the title to your home remains in your name when you take out a reverse mortgage loan. However, unlike a traditional mortgage, borrowers don't make monthly mortgage payments with a reverse mortgage loan. Instead, the loan is repaid when the borrower no longer resides in the home. Interest and fees are added to the loan balance each month, and the balance grows. With a reverse mortgage loan, homeowners must pay property taxes and homeowners insurance, use the property as their principal residence, and keep their house in good condition.
To be eligible for a Reverse Mortgage, the applicant must be 62 years or older, own the property, and occupy it as their main residence. In addition, they must maintain the home with required repairs, property taxes, and insurance. Also, the property does need to satisfy specific FHA property standards. Finally, the applicant must participate in a reverse mortgage counseling session (this can be done over the phone or in person.)
