Review
What is it
A reverse mortgage is a loan for senior homeowners will use a home equity as collateral. The loan is not due until the last surviving homeowner moves out of the property or passes away. The loan amount is a percentage of the property’s value determined by the age of the youngest homeowner.
Eligibility
To be eligible of a reverse mortgage the FHA requires that all homeowners must be over the age of 62 and have adequate home equity.
Eligible properties
Most homes are eligible except mobile homes built in the last 30 years, the land must be owned, on permanent foundation and FHA approved.
Loan limit
The amount that is available depends on many factors which include age, current interest rate and the value of the home.
Distribution of money
- Term
- Tenure
- Lump sum
- Line of credit
Inheritance
If the homeowner dies, the estate can either repay the reverse mortgage to keep the home, or sell the home to repay the reverse mortgage and keep the remaining balance.
If the property sells for less than what is owed, it does not fall on the estate.
