A reverse mortgage is a loan available to homeowners 62 years and older that allows them to convert a portion of their home’s equity into cash. Unlike a traditional mortgage where the homeowner makes monthly payments to the lender, with a reverse mortgage, the lender pays the homeowner. The loan is repaid when the homeowner sells the home, moves out, or passes away.

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The most common type of reverse mortgage is a Home Equity Conversion Mortgage (HECM), which is backed by the Federal Housing Administration (FHA). The amount you can borrow depends on your age, the home’s value, and current interest rates.

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Reverse Mortgage Requirements

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To qualify for a reverse mortgage, you must meet the following requirements:

• Age: You must be 62 or older.

• Primary Residence: The home must be your primary residence, and you must continue to live there for the duration of the loan.

• Home Equity: You must have a substantial amount of equity in your home, usually 50% or more.

• Financial Assessment: Lenders will assess your ability to pay property taxes, homeowners insurance, and maintenance costs to ensure the loan remains sustainable.

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Reverse Mortgage Benefits

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• No Monthly Mortgage Payments: You are not required to make monthly payments on the loan as long as you continue living in the home.

• Access to Home Equity: You can receive the loan proceeds as a lump sum, monthly payments, or a line of credit, giving you flexibility in how you access your funds.

• Stay in Your Home: A reverse mortgage allows you to stay in your home while using its value to supplement your retirement income.

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The Bottom Line on Reverse Mortgages

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A reverse mortgage can be a great financial tool for retirees looking to access their home equity without selling their home or taking on monthly mortgage payments. If you’re 62 or older and want to explore this option, contact us today to see if a reverse mortgage is right for you.