Understanding Reverse Mortgages

A reverse mortgage allows you to turn part of your home’s equity into tax-free money* with no mandatory mortgage payments. In short, it’s a loan against your home’s equity that you don’t have to pay back while you continue to live there.

Reverse mortgages have experienced steady improvements since they were introduced 50+ years ago. In the late 1980s, the U.S. government began regulating and insuring Home Equity Conversion Mortgages. As consumer demand has evolved, so have federal guidelines to protect the rights and interests of seniors who want or need to tap the equity in their homes.

Reverse mortgages have many benefits:

  • You still own your home
  • You can live in your home as long as you wish
  • Your proceeds are tax-free*
  • You can use your proceeds for whatever you wish
  • There’s no required monthly mortgage payment (no more house payments)
  • You can never owe more than your home’s value, regardless of your loan’s balance.

Here’s how they work

Like a conventional mortgage, everyone who applies for a reverse mortgage must meet eligibility requirements (see below). You will also need to attend a third-party counseling session to ensure you understand the process

Once eligible, you’ll select the loan type and payment options that best meet your needs (lump sum, line of credit, monthly payments, etc.). An eReverse mortgage expert is here to walk you through your options and help you make the right decisions.

Then simply enjoy the equity from your home.

Are you eligible for a reverse mortgage?

One borrower listed on the title must be at least 62 years of age. You must own the home and it must be your primary residence. Similar to a conventional mortgage, borrowers must meet basic credit and income requirements.

Your loan obligations

Like a conventional mortgage, you will still be required to pay property taxes, homeowner’s insurance and regular home maintenance. In addition, you will need to occupy the home.

Putting seniors first

While reverse mortgages have been around for years, several recent federal requirements put your interests first:

  • A financial assessment means borrowers won’t get in over their heads because they have the ability to meet their loan obligations.
  • Eligible, non-borrowing spouses will be able to stay in the home after the death of their borrowing spouse as long as they continue to comply with basic loan terms.

* Not tax advice. Please consult a tax professional.

Is a Reverse Mortgage Right for You?

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