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What are the basics?

At least one borrower must be 62 year of age or older*

  • Must be the primary residence
  • Limited income and credit requirements
  • No monthly mortgage payments**
  • Fixed and Adjustable rate options available

*In Texas all borrowers must be at least 62 **Homeowners must continue to pay property taxes, HO Insurance and HOA dues if applicable.

Common Misconceptions!

  • The lender will own the home.
    • Borrower retains title to the home. The lender will place a lien on the home just like any other mortgage. Borrower can pay the loan off at any time and all remaining equity in the home belongs to them or their heirs.
  • There won’t be any equity left for the heirs.
    • There may still be equity in the home, but it’s possible borrower could be upside down depending on the circumstances of their loan. The good news is, a HECM is a non-recourse loan.

What Happens at “The End”

  • You can sell the home at any time, pay back what you have used and the remaining equity belongs to you.
  • Once the last borrower has passed away or left the home for more than 12 months the loan becomes due.
  • Your heirs have 3 choices. They can:
    • Keep the home by refinancing the HECM for 95% of appraised value or the loan balance, whichever is less.
    • They can sell the home and receive the remaining equity
    • They can walk away from a home that is upside down with no recourse to the estate.

Things to know about Reverse Mortgages

  1. At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
  2. Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees
  3. The loan balance over time and interest is charged on the outstanding balance
  4. The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home
  5. Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment

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