A Reverse Mortgage is a loan against the equity you have built up in your home that you do not have to pay back for as long as you live there. Homeowners who are at least 62 years of age and have paid off their mortgages or have small balances may be eligible for a Reverse Mortgage.
The home that you own and live in must be your primary residence. It can be a Single-Family dwelling or a two-to-four unit property and be eligible for a Reverse Mortgage. Stand alone houses, townhouses, condominiums (if FHA-approved) and some manufactured homes are also eligible. The home has to meet HUD minimum property standards and be in reasonable condition; in some cases, limited repairs to the property can be made after the closing of a Reverse Mortgage.
With a Reverse Mortgage, you can get cash from your home’s equity without having to make monthly mortgage payments each month. Lenders receive the loan principal, plus interest, when you leave the home as your primary residence. After the Reverse Mortgage is paid-off, the remaining equity in the home goes to the homeowner or his/her survivors.
HUD will provide Mortgage Insurance and in the event that the pay-off exceeds the property value, HUD will make up the shortage to the lender through an insurance program all borrows must participate in.
There are several ways you can get the cash from a Reverse Mortgage:
No matter how this loan is paid out to you, the loan typically doesn’t have to be paid back until you die, sell your home, or permanently move out of your home.
The amount you can borrow depends on your age, the interest rate, and the value of your home. For example, at an interest rate of 9% (which is higher than most of today’s current rates) a 65-year-old person could borrow up to 26% of their home’s value, a 75 year old could borrow up to 39%, and an 85 year old up to 56% of their home’s value.
For more information on Reverse Mortgages you may wish to contact the Illinois Department of Financial and Professional Regulation at: 1-217-785-2900, or any of the following websites and phone numbers:
Retirement Information
HUD Information about Reverse Mortgages or call toll free: 1-888-466-3487
HUD Government Offices
AARP Reverse Mortgage Information
Citizen Information Pueblo Colorado
