The Reverse Mortgage (RM) is one solution for homeowners who are looking for a way to access the equity in their homes without taking on more debt.
An RM is also known as a Home Equity Conversion Mortgage (HECM), where the borrower can pull a specific amount of equity out of the property.
No payments are made to the lender until the borrower either passes on or permanently moves out of the property.
Borrowers must be a minimum of 62 years of age to participate, and they are eligible to receive a percentage of the equity in the property. The older borrowers are, the more equity they are eligible to receive.
If there are liens on the property, they are typically rolled into the RM, so it is the only lien on the property.
Other than pulling title on the property, and running a credit report on the borrower or borrowers, there is very little in the way of documentation that the borrower needs to provide at application or later in the process.
Borrowers can receive a lump sum at closing, in monthly payments or as a line of credit to be accessed when needed.
Those interested in getting an RM are required by the Department of Housing and Urban Development to attend a counseling session separate from the mortgage professional. It gives them an opportunity to ask questions.
For more information, borrowers should contact their mortgage professional.