Reverse Mortgage Overview - For Seniors 62+
We have all the information to help you understand what a reverse mortgage is, and if it is right for you or someone you know. Scroll through the page or select a link below to jump ahead:
Let Your Home Take Care of You With a Reverse Mortgage
Reverse mortgages were created specifically for senior homeowners, allowing them to make the most of the equity they have acquired in their homes.
With a reverse mortgage, you borrow against the equity you have established in your home and do not need to repay the loan for as long as you live in the home as your primary residence, maintain your home in good condition, and pay property taxes and insurance. You can live in your home and enjoy making no monthly principal and interest mortgage payments.
Depending on your financial situation, a reverse mortgage has the potential to help you stay in your home and still meet your financial obligations.
We realize that reverse mortgages may not be right for everyone, and encourage you to gather and review the reverse mortgage information and discuss your specific needs with your family members and your financial, legal, and tax advisors. Generation Mortgage Company's Reverse Mortgage Professionals are dedicated to helping you throughout this process and are available to answer any of your questions.
How a Reverse Mortgage Works
Reverse Mortgages vs. Traditional Mortgage or Home Equity Loans
A reverse mortgage is the opposite of a traditional mortgage. With a traditional mortgage, you borrow money and make monthly principal and interest mortgage payments.
With a reverse mortgage, however, you receive loan proceeds based on the value of your home, the age of the youngest borrower, and the interest rate of your loan. You do not make monthly principal and interest mortgage payments for as long as you live in, maintain your home in good condition, and pay property taxes and insurance. The loan must be repaid when you pass away, sell your home, or no longer live in the home as your primary residence.
Basic Types of Reverse Mortgages
HECM: A Home Equity Conversion Mortgage, or HECM, is the only reverse mortgage insured by the U.S. Federal Government, and is only available through a Federal Housing Administration (FHA) approved lender, such as Generation Mortgage Company. There are three major HECM products:
HECM FIXED:The HECM FIXED offers a fixed rate product in a single transaction where all the proceeds of the loan are disbursed at once. Interest accrues on the entire balance borrowed.
HECM LIBOR:The HECM LIBOR offers an adjustable rate product which allows the borrowers to have increased flexibility on how and when to use the funds available, along with the benefits of a line of credit. Funds may be accessed in a line of credit, tenure or term payouts, lump sum or a combination. Interest only accrues on the funds that have been borrowed, allowing the unused portion of the line of credit to grow, creating more borrowing capacity over time.
Jumbo Reverse Mortgage (Generation Plus®): Generation Mortgage Company also offers one of the country's only Jumbo Reverse Mortgage, which is designed for seniors with high-value homes and allows access to greater amounts of home equity than is typically available from government-insured HECM Reverse Mortgages. This product is not insured by the FHA.
How Much Can Be Borrowed?
The maximum amount that can be borrowed on a particular loan program is based on these factors:
- Age—of the youngest borrower at the time of the loan
- Value—the appraised value of the home
- Rates—current rates can impact the loan amount
Initial Eligibility Requirements for Reverse Mortgages
The initial eligibility requirements are quite simple.
- Homeowners must be 62 years of age or older and occupy the property as their primary residence
- The property may be a Single family or a 2-4 Unit property, Townhome, or FHA-approved Condominium
- The home must meet minimum FHA property standards
- Borrower cannot be delinquent on any federal debt
- Completion of HECM counseling
Learn more about Highlights & Basic Parameters
Additional Reverse Mortgage Feature
A reverse mortgage is a non-recourse loan, which means the borrower (or the borrower's estate) of a reverse mortgage will not owe more than the future loan balance or the value of the property, whichever is less. If the borrower or representatives of his or her estate choose to sell the property to pay off the reverse mortgage loan, no assets other than the home will be used to repay the debt. If the borrower or his or her estate wishes to retain the property, the balance of the loan must be paid in full.