A reverse mortgage is also commonly referred to as a Home Equity Conversion Mortgage (HECM) by the FHA. The mortgage allows you to withdrawal equity in the home while still being able to reside in the home. Many seniors use a reverse mortgage to help with their monthly expenses such as entertainment, daily expenses and unexpected medical expenses. Borrowers do not have to repay the HECM until they no longer live in the home either by passing on or they decide to sell their home. Getting a reverse mortgage requires a borrower to meet several requirements:
The amount the homeowner can receive is based on the current interest rate, the appraised value of the property, the age of the homeowner and type of payment taken.
A home equity loan requires a borrower to qualify with enough income to be able to pay back the loan. A reverse mortgage is tapping into one's equity and paying the homeowner either through a lump sum or a monthly payment.
For more information, visit HUD's HECM informational page.
If you are interested in receiving more information about a reverse mortgage, please continue to our reverse mortgage center.