A reverse mortgage is a loan that enables senior homeowners, age 55* and older, to convert part of their home equity into tax-free** payments, without having to sell their home, give up title to it, or make monthly mortgage payments. Borrowers are required to pay insurance, property taxes, maintenance costs and follow all of the terms of the loan (including, but not limited to, maintaining home as primary residence) or the loan will become due and payable and the property will be subject to foreclosure.

* Some states require a higher age requirement of 60 or 62+. **Consult tax advisor.

With a reverse mortgage, the borrowers continue to live in and own their home, as long as they comply with the terms of the mortgage loan. Unlike a traditional home equity loan or second mortgage, the principal and interest is not required to be paid on a monthly basis. All property taxes and homeowners insurance obligations must be maintained throughout the year. The homeowners remain responsible for keeping current with property taxes and homeowners insurance, maintaining the condition of the home, and the home must remain the primary residence.

A reverse mortgage and a home equity loan both use the equity in your home to provide you with cash. With a home equity loan, you have to make regular monthly payments of principal and interest. With a reverse mortgage, you do not make any monthly mortgage payments for as long as you stay in the home. Borrowers must follow the loan’s terms and continue to pay property taxes, homeowners insurance and maintenance, otherwise the loan will become due and payable and may lead to foreclosure. The loan becomes due (is repaid) when the borrower no longer lives in the home.

There are many:

• You remain independent. A reverse mortgage allows you to retain home ownership and the bank does not own your home.*
• You stay in your home. A reverse mortgage means you don’t have to move or downsize.*
• You can use the money for home modifications and repairs.
• You don’t have monthly mortgage payments. Borrowers must follow the loan’s terms and continue to pay property taxes, homeowners insurance and maintenance, otherwise the loan will become due and payable and may lead to foreclosure. You don’t need to pay back the reverse mortgage loan or make any monthly mortgage payments until you permanently move out of the home or fail to comply with the loan’s terms.
• The money is tax free.** Because the money you receive from a reverse mortgage is not considered income, it is tax free** and will not affect your Social Security or Medicare benefits.***
• You have freedom and flexibility. The money you get from a reverse mortgage is yours to use in any way you choose.

*There are closing costs associated with a refinance. These charges can be financed into the loan or paid at closing. Contact us to speak with a loan specialist for more information.

**Consult tax advisor.

***It may affect affect disability, medicaid, or other public assistance income.

No. We offer two types of reverse mortgages:

1. Home Equity Conversion Mortgages (HECMs), which are widely available, have no income requirements, and can be used for any purpose. However, the maximum claim amount is currently $970,800. If your home is valued at more than $900,000, you may be able to get more money through another type of loan.

2. Jumbo reverse mortgages, like Nationwide Equities’ proprietary product EquityPower, offer unique features that appeal to certain kinds of borrowers. EquityPower allows borrowers with high value properties (from $900,000 to $10M) to access more equity from their home than a HECM.

No. Just like a traditional mortgage, as long as the terms of the loan and other payment obligations such as property taxes, homeowners insurance and maintenance are met,* borrowers retain full homeownership and can sell the home at any time. 

*Borrowers must follow the loan’s terms and continue to pay property taxes, homeowners insurance and maintenance, otherwise the loan will become due and payable and may lead to foreclosure. There are closing costs associated with a refinance. These charges can be financed into the loan or paid at closing. Contact us to speak with a loan specialist for more information.

The amount you can borrow depends on several factors, including your age, the type of reverse mortgage you select, current interest rates, your state of residence, the appraised value of your home and the program. Your age, the value of your home, and what you owe on your current mortgage help determine the reverse mortgage for which you are eligible. Learn about Jumbo Reverse Mortgages for high-value homes here.

The home must be your primary residence. Different types of reverse mortgages have specific requirements for what type of home is eligible. Most reverse mortgages are taken on single family homes. Some programs also accept 2-to-4 unit buildings that are owner-occupied. Some programs may grant reverse mortgages to homes that do not meet FHA’s standards.

Yes, you may still be eligible. The funds you would receive in the reverse mortgage would be used to pay off any existing mortgages you have on the property. 

No. Reverse mortgages may only be taken out on your primary residence. 

Depending on the type of mortgage, you may take your funds as a lump sum; a line of credit; monthly payments for a specified time period; or a combination of these, assuming all of the loan terms are met. 

You can use the money for anything that makes your retirement dream come true. That might be daily living expenses so you can retire, home improvements, healthcare expenses, or whatever you choose.

Yes. Refinancing can make sense if your home increases in value or interest rates drop. Click here to learn more about refinancing a reverse mortgage. However, there are closing costs associated with a refinance. These charges can be financed into the loan or paid at closing. Contact us to speak with a loan specialist for more information.

It is possible. Every reverse loan has an amortization schedule of the annual projections of interests over a period of time. For some homeowners, the reverse balance could rise to greater than the value of the home. All HECM Reverse loans and our Jumbo Equity Power Reverse include a non-recourse feature. A more detailed explanation of this feature can and should be requested from your loan specialist during your decision making process.

It might. While a reverse mortgage is not an income driven product, there are still minimum residual income requirements to protect the homeowner in the event they cannot pay for homeowners insurance, property taxes or maintenance costs, which could result in a default of the loan. A borrower who may not meet the residual income requirement may obtain a Life Expectancy Set-Aside to help pay future mandatory housing expenses if there are enough funds to cover the set-aside.

A reverse mortgage may help you pay for a more comfortable retirement with greater financial independence. We encourage you to involve family members in your decision process so you can make the choice that’s right for you. When the home is sold, is no longer your primary residence, or the loan becomes due and payable for any reason as set forth in the loan documents, the loan must be repaid. Any remaining equity belongs to you or your estate, and can be transferred to heirs.

Your reverse mortgage loan becomes due and must be paid in full when one or more of the following conditions occur: (a) the last surviving borrower passes away or sells the home; (b) all borrowers permanently move out of the home; (c) the last surviving borrower fails to live in the home for 12 consecutive months due to physical or mental illness; (d) you fail to pay property taxes or homeowners’ insurance; (e) you let the property deteriorate, beyond what is considered reasonable wear and tear, and do not correct the problems; and (f) you fail to comply with the loan’s terms.

When one of the maturity events has occurred as set forth in the loan documents, the balance of the reverse mortgage is called due at that time. The balance will include the original principal amount of the loan at closing plus any additional interest, principal, line of credit draws, servicing fees, payments made by the lender for taxes, homeowner’s insurance, maintenance, if any, and all other costs and expenses incurred by lender, as set forth in the loan documents. The interest will continue to accumulate until the loan is paid off, and property taxes and homeowner’s insurance for the property will need to be paid throughout the life of the loan.

The funds from a reverse mortgage do not affect regular Social Security or Medicare benefits. You should discuss the impact of a reverse mortgage on federal, state or local assistance programs with a professional advisor, such as your local Area Agency on Aging (toll free at 1-800-677-1116), an independent reverse mortgage consultant, or a tax attorney.