What is a Reverse Mortgage and how does it work is the question many seniors are asking. Here are some of the answers you seek. First, a reverse mortgage is also known by the government as an Home Equity Conversion Mortgage or HECM. So the terms HECM and reverse mortgage are interchangeable.
A Reverse Mortgage allows senior citizens the age of 62 or older to convert some of the equity in their home into cash. The size of the loan you can qualify for is based on your age. For example, if you are 62 years old then you would qualify for the smallest loan to value on your home. If your home is worth $200,000, then you would qualify for up to a $123,800 loan amount, which can be used to pay off a current mortgage or you can use the loan for anything you want. If the home is worth $250,000, then you would be eligible for $154,750. So essentially based on a 62 year old borrower, they would be eligible for 61.9% of the value of the home.
If you were 72 years old then the loan amount you would be eligible for is 67.7% of the home value. The loan limit is based on your age and as nothing to do with credit score, income or assets because reverse mortgages do not even use these to qualify a borrower. The older you are the more you qualify for.
The best part of a reverse mortgage is there are no monthly payments for as long as you live in the home. The only way you would ever have to pay back a reverse mortgage is if you pass away, move away from the home for more than 6 months or sell the home.
A short video has been put together to answer some of the other pertinent questions you may have. Please see the video below.
What is a Reverse Mortgage and how does it work
![What is a Reverse Mortgage and how does it work]()
Reviewed by Merlyn Rosell
Published :
Rating : 4.5
Published :
Rating : 4.5