Reverse Fundamentals

A reverse mortgage is a powerful retirement tool for homeowners with significant equity in their home.

AnnieMac Home Mortgage wants to ensure that you are in a position to make an educated decision on a reverse mortgage. That’s why we are addressing some of the common misconceptions:

  • You can never owe more than the value of your home. A reverse mortgage is a non-recourse loan.
  • You will retain title to the property.
  • You will receive payments instead of making them. Be sure to ask your Reverse Mortgage Specialist for details about when repayment may be due.

Eligibility requirements for a reverse mortgage are simple. Although there are no income, employment or credit score qualifying restrictions, you must meet the following guidelines:

  • All homeowners must be at least 62 or older and occupy the home as a primary residence.
  • You may qualify even if you have an outstanding mortgage balance however the mortgage balance must be paid in full with the proceeds of the reverse mortgage.
  • Condominiums, townhomes, detached homes, planned unit developments (PUDs) and some manufactured homes are eligible.
  • The home must be up to HUD minimum standards. In some cases you can make repairs after your reverse mortgage closing.

Your loan amount is based on the following factors:

  • The age of the youngest homeowner
  • The appraised value of your home
  • The current interest rate
  • The local lending limit as set forth by FHA

Generally speaking, the older you are, the more your home is worth, the more you will be able to borrow. To find out how much you can borrow, contact your AnnieMac Reverse Mortgage Specialist.

Homeowners who obtain a reverse mortgage have differing needs. Some would rather receive the entire loan amount up front, while others prefer a steady monthly income to supplement their other income. Regardless of how you choose to receive your proceeds, you can adjust your plan as needed to accommodate your changing needs.

You have several distribution options to choose from:

  • Lump Sum – A specific amount is made immediately available (typically used to pay off an existing mortgage).
  • Tenure – Loan proceeds are sent monthly for as long as at least one homeowner continues to occupy the home as a primary residence.
  • Term – Loan proceeds are released in set monthly amounts for a specific period as requested by you, the homeowner.
  • Line of Credit – Funds remain available for you to draw from on as needed basis.
  • Combination – You can receive any combination of lump sum, monthly, or line of credit distributions.

There are no restrictions on how you can use the proceeds of your reverse mortgage which means you can direct the funds to a variety of purposes, including:

  • Eliminating your existing mortgage payment
  • Consolidating debt
  • Supplementing your retirement income
  • Increasing the value of your home through remodeling or repairing your home
  • Covering Healthcare Costs
  • Planning for long-term care needs

Your loan proceeds are not considered income and do not affect Social Security or Medicare benefits. However, receiving monthly advances could affect your eligibility for some public assistance programs which are based on need. To be sure you are properly advised, please consult a local attorney to determine how (or if) your distributions might impact your specific situation.

Your reverse mortgage must be paid when the last surviving borrower sells the home, moves out permanently or passes away. There are no prepayment penalties. You must keep the taxes and insurance current and maintain the property to minimum FHA standards. The amount required to be repaid to the lender is the amount borrowed, the accrued interest, the servicing fees, and any other costs financed as part of the loan amount. At no time will the repayment amount exceed the value of the home.

Direct: 973-265-1610