Best Reverse Mortgage Lender

A reverse mortgage is a financial product that allows homeowners aged 60 and older to borrow against the equity in their homes. Instead of making monthly mortgage payments to the lender, the lender pays you in a lump sum, monthly installments, or through a line of credit. The loan doesn’t need to be repaid until the homeowner sells the home, moves out permanently, or passes away.

With a reverse mortgage, the loan amount is based on the homeowner’s age, the value of the home, and current interest rates. As the borrower, you continue to live in the home, but instead of making monthly mortgage payments, the loan balance increases over time as interest and fees accrue. The loan is repaid when the homeowner moves, sells the home, or passes away, usually from the sale of the home.

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

• Be at least 60 years old (depending on the lender, this age may vary slightly)

• Own your home outright or have a low remaining mortgage balance

• The home must be your primary residence

• The property must meet certain standards, including structural integrity and maintenance

• You must have the financial ability to continue paying property taxes, insurance, and maintenance costs

The amount you can borrow with a reverse mortgage depends on:

• The age of the youngest borrower (the older you are, the more you can borrow)

• The current value of your home, as determined by an appraisal

• Current interest rates

• The type of reverse mortgage product you choose

No, you are not required to make monthly payments on a reverse mortgage. The loan balance, including interest and fees, is repaid when the loan becomes due (typically when the home is sold, the borrower moves out, or the borrower passes away). However, you are responsible for maintaining the property, paying property taxes, and keeping homeowners insurance up to date.

The loan is repaid when the borrower sells the home, moves out permanently, or passes away. The loan balance, including any accrued interest and fees, is usually paid from the sale proceeds of the home. If the sale price exceeds the loan balance, the remaining funds go to the homeowner or their heirs. If the loan balance is higher than the home’s value, reverse mortgages are non-recourse loans, meaning you or your heirs will not owe more than the home’s value.

Some potential risks to consider include:

• Decreased Home Equity: Since you’re borrowing against the equity in your home, the remaining equity for your estate or heirs is reduced.

• Ongoing Costs: You must continue to pay property taxes, homeowners insurance, and maintain the home. Failure to do so could result in foreclosure.

• Impact on Government Benefits: Reverse mortgage proceeds may affect your eligibility for some government benefits, such as Medicaid.

• Loan Balance Growth: The loan balance grows over time as interest and fees accumulate, which may result in little to no equity remaining in the home.

As long as you meet the loan requirements—such as living in the home, paying property taxes and homeowners insurance, and maintaining the property—you cannot lose your home to a reverse mortgage. However, if you fail to meet these obligations, the lender may call the loan due, which could result in foreclosure if the loan balance cannot be repaid.

Yes, if there is any remaining equity in the home after the reverse mortgage is repaid, your heirs will inherit it. However, if the loan balance exceeds the value of the home, your heirs will not owe the difference, as reverse mortgages are non-recourse loans.

Reverse mortgage interest rates can be fixed or variable, depending on the type of reverse mortgage you choose. Interest is added to the loan balance over time but is not paid out-of-pocket by the borrower. The interest, along with any fees, is due when the loan is repaid (usually when the home is sold or the borrower passes away).

No, the money you receive from a reverse mortgage is considered a loan advance, not income. Therefore, reverse mortgage payments are generally not taxed. However, always consult a tax advisor to understand how a reverse mortgage might affect your specific tax situation.

Yes, the funds from a reverse mortgage can be used for almost any purpose, including:

• Supplementing retirement income

• Paying for healthcare costs

• Home repairs or renovations

• Paying off an existing mortgage

• Travel, living expenses, or debt consolidation

There are several upfront costs associated with reverse mortgages, including:

• Origination Fees: Charged by the lender for processing the loan.

• Closing Costs: Includes fees for home appraisals, title insurance, and other services.

• Mortgage Insurance Premiums: This protects both the lender and borrower in case the loan balance exceeds the home’s value. These costs are typically added to the loan balance and don’t need to be paid out-of-pocket.

Eligible properties for reverse mortgages generally include:

• Single-family homes

• Multi-unit homes (up to four units, as long as one unit is the primary residence)

• Condominiums (subject to specific FHA approval)

• Townhouses Manufactured homes may also qualify if they meet certain criteria. Investment properties and vacation homes are not eligible.

Yes, you can still get a reverse mortgage if you have an existing mortgage, but the proceeds from the reverse mortgage must first be used to pay off the remaining mortgage balance. The remaining funds can then be used as you wish.

The process to obtain a reverse mortgage can take anywhere from 30 to 60 days, depending on factors such as the property appraisal, counseling, and application approval.

A reverse mortgage may be right for you if:

• You want to supplement your retirement income without selling your home.

• You have substantial equity in your home and want to remain living in it.

• You can continue to meet the responsibilities of homeownership, including maintenance, property taxes, and insurance. However, it’s important to consider the long-term impact on your estate and discuss your options with family members and a financial advisor before making a decision.