Program Overview

Today, there are more homeownership options for retired individuals and couples than ever before.

Make the Most of Retirement!
If you are at least 62 years old and have low or no outstanding mortgage debt, our Reverse Mortgage programs allow you to borrow against the equity you've built in your home without your repaying the debt for as long as you live there. That's the "reverse" part of this kind of mortgage loan. Instead of making monthly payments, you can opt to receive them!



Reverse Mortgage vs. Traditional Refinance Loans
Traditional refinance loans mean that the homeowner borrows a large amount of money and makes monthly payments. As payments are made, the loan balance gets smaller and the equity grows.

With a Reverse Mortgage, the homeowner borrows small amounts - monthly or at other intervals through a line of credit. Over the course of time, the loan balance gets larger, and equity gets smaller. Payment is required only once, at the end of the loan, which in most cases is when the homeowner dies, sells or no longer uses the home as a primary residence.

Flexible Access to Extra Income
Reverse Mortgages allow borrowers to obtain loan proceeds:

• in a lump sum to cover large expenses
• in monthly installments to supplement income
• as a line of credit to draw on as necessary

There is even a choice for an immediate cash advance in addition to monthly allotments. And borrowers can change funds-distribution plans as many times as they wish.

Stay in Your Home with Peace of Mind

• There are no income, employment or credit qualifying restrictions.*
• Maximum loan amount is based on age, where borrower lives and the value of the home. The amount owed can never exceed property value, so a Reverse Mortgage can never cause you to lose your home.
• The funds received during loan term, plus any accrued interest, become due when borrower sells or no longer uses the home as a primary residence.

What is a reverse mortgage?

A reverse mortgage (or lifetime mortgage) is a loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (e.g., into aged care).

In a conventional mortgage the homeowner makes a monthly amortized payment to the lender; after each payment the equity increases within his or her property, and typically after the end of the term (e.g., 30 years) the mortgage has been paid in full and the property is released from the lender. In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. If the owner receives monthly payments, or a bulk payment of the available equity percentage for their age, then the debt on the property increases each month.

If a property has increased in value after a reverse mortgage is taken out, it is possible to acquire a second (or third) reverse mortgage over the increased equity in the home. But in certain countries (including the United States), a reverse mortgage must be the only mortgage on the property.

Requirements

To qualify for a reverse mortgage in the United States, the borrower must be at least 62 years of age. There are no minimum income or credit requirements, but there are other requirements and homeowners should make sure that they qualify for the loan before they invest significant time or money into the process. For most reverse mortgages, the money can be used for any purpose; however, the borrower must pay off any existing mortgage(s) with the proceeds from the reverse mortgage and, if needed, additional personal funds. A pending bankruptcy which has not been finalized may, however, slow the process. Some types of dwellings do not qualify, while others (like mobile homes) have special requirements (such as being on an approved permanent foundation and built after 1976) in order to be approved. Before borrowing, applicants must seek third party financial counseling from a source which is approved by the Department of Housing and Urban Development (HUD). The counseling is a safeguard for the borrower and his/her family, to make sure the borrower completely understands what a reverse mortgage is and how one is obtained. The current lending limit (the maximum the home can be appraised for, no matter how much it's worth) is $625,500. This was increased in 2009, after being raised from $200,000 to $417,000 in 2008. The maximum an originator can charge for a loan origination fee on a reverse mortgage is $6,000.

The older the individual is, the more lenient the qualifications become, as the mortality rate increases with age. Once you make application and have been given the proper information and consultation with a seasoned professional, you will be required to attend a counseling session given by a HUD-approved counselor (in the US). These sessions typically cost anywhere between $ 100 - $ 125 (in the US) although some agencies receive federal grants which allow them to provide it for free. This allows another opportunity to ask all the necessary and proper questions. During the loan and the remainder of its life, you cannot be asked to leave the property, as you still are the owner and deed holder. This is the case whether you outlast the performance of the loan or not. As far as your heirs go, they are still entitled to the property upon your passing. The estate will be settled in the normal way, the property will be passed on to the heirs, and they can refinance out of the reverse mortgage. If they decide not to reside in the property, they can sell the unit, pay off the reverse mortgage, and keep the balance of the monies of the estate. They have one year, from the passing of the note holders, to settle the mortgage.

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