FHA Reverse mortgage is a program designed for Seniors that will allow them to borrow against their home equity and take cash out of their homes. This mortgage is also known throughout the industry as a Home Equity Conversion Mortgage or HECM for short.
With FHA loans reverse mortgage program, repayment isn’t required for the duration that the borrower lives in the residence. This FHA Home Loans program lender is repaid when the home is sold and the buyer is no longer living in that property. In the case that the proceeds from the sale of the home is not enough to repay the reverse mortgage balance, the FHA will repay the mortgage lender the difference.
Some common payments options that are available for the FHA Reverse Mortgages are:
- One-time lump sum payout
- Monthly payouts (fixed amount and term for the duration of the time you live in the home)
- No exact schedule of payout (line of credit)
Qualifications for FHA Loans reverse mortgage:
- No income or asset limitations (debt)
- Must have very little or no money owed on current residence
- Must be older than 62
There are three variables that determine the amount of the reverse mortgage. The older the borrower, the larger the percent value that borrower will receive on their home. Here are the three variables:
- The borrower’s age
- The interest rate
- The appraised value of the home