REVERSE MORTGAGE

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A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), allows homeowners aged 62 or older to convert part of their home’s equity into cash without having to sell the home or make monthly mortgage payments. The loan is repaid when the homeowner sells the house, moves out, or passes away.

A reverse mortgage enables you to borrow against your home’s equity, with no monthly mortgage payments required. The loan is repaid when you move out or sell the home, with interest and fees added to the loan balance over time.

To qualify, homeowners must be 62 years of age or older, live in the home as their primary residence, and complete a reverse mortgage counseling session. In Texas and Florida, both states require specific compliance with federal regulations, including financial assessments.

Reverse mortgages apply to primary residences only, including single-family homes, FHA-approved condos, and some manufactured homes. New construction is eligible if the Certificate of Occupancy (CO) has been issued before the reverse mortgage application date.

Unlike traditional loans, reverse mortgages are not credit score-driven. A credit report will be obtained, but it’s used primarily for verifying payment histories on things like property taxes and insurance, not for qualifying purposes.

The amount you can borrow, known as the Principal Limit, depends on the age of the youngest borrower, the current interest rate, and the appraised value of your home. For 2022, the FHA lending limit is capped at $970,800.

The loan is repaid when you sell your home, no longer live there as your primary residence, or pass away. The repayment includes the borrowed amount, plus interest and any fees accrued over time.

Yes, reverse mortgages can be used to purchase a new home in both Texas and Florida, provided the new property qualifies and becomes your primary residence.

Costs include an initial mortgage insurance premium (MIP), origination fees, closing costs, and ongoing servicing fees. These can be paid upfront or rolled into the loan balance.

Upon the homeowner's death, heirs can sell the home to pay off the loan, or they can keep the home by paying off the reverse mortgage balance. If the home’s value is less than the loan amount, FHA insurance covers the difference.

Yes, even with a reverse mortgage, homeowners must continue to pay property taxes, homeowners insurance, and any applicable HOA fees to avoid foreclosure.

You can continue living in your home without making mortgage payments as long as the home remains your primary residence and you meet all other loan requirements, such as paying property taxes and insurance.

The amount you can borrow depends on several factors, including your age, home value, and interest rates. In high-net-worth zip codes in Texas (e.g., 75205, 77024) and Florida (e.g., 33139, 33480), borrowers with high home values may qualify for larger loan amounts, up to the FHA lending limit of $970,800.

You can still get a reverse mortgage if you have an existing mortgage, but it must be paid off using the proceeds from the reverse mortgage loan.

After closing a reverse mortgage, you have three business days to cancel the loan without penalty. You must notify the lender in writing within this period.

A financial assessment ensures you have sufficient income or assets to cover ongoing obligations such as property taxes, insurance, and home maintenance. Residual income calculations are part of the qualification process.

You can lose your home if you fail to meet the loan’s obligations, such as paying property taxes, homeowners insurance, or maintaining the property. Foreclosure is a possibility if these requirements aren’t met.

Interest rates play a role in how much you can borrow and the growth of your loan balance. Lower rates typically allow you to borrow more, while higher rates increase the loan balance more quickly.

No, funds received from a reverse mortgage are generally not considered taxable income since they are loan proceeds, not income.

Yes, but the Certificate of Occupancy must be issued before applying for the reverse mortgage. New construction homes are eligible under this condition.

Reverse mortgage counseling is mandatory to ensure you fully understand the terms and conditions of the loan. It must be completed before submitting your application.

FHA mortgage insurance protects both the borrower and lender. It ensures you will never owe more than the home’s value at the time of repayment, even if your loan balance exceeds the home’s value.

Yes, refinancing a reverse mortgage is possible, often referred to as a HECM-to-HECM refinance. This might make sense if home values increase or if interest rates drop.

No, reverse mortgages are only available for primary residences. You must live in the home as your main residence.

Be wary of contractors or salespeople offering reverse mortgage loans for home repairs or unsolicited financial products. Only work with licensed, reputable reverse mortgage lenders to avoid scams.