General
There are several requirements to maintain a reverse mortgage agreement. Aside from maintaining the home in a state of good repair, there are two additional stipulations:
- The home must be your principal residence
- You must stay up-to-date on all property charges such as property tax and homeowners insurance
To qualify for a reverse mortgage, you will have to have a significant amount of equity built-up in the home. There is no specific amount of equity needed and you can get a reverse mortgage even if you have an existing mortgage. The proceeds from the reverse will pay it off and the balance is incorporate into the amount borrowed. As a rule of thumb, you should have 50% equity or more in your home for a reverse mortgage. This is because you must use the reverse mortgage proceeds to pay off your existing home loan first. If you own less than 50%, the proceeds of your reverse mortgage won’t cover that gap.
With a HECM or HomeSafe for Purchase, your new home down payment is typically between 45% and 62% of the purchase price, depending on your age or your eligible non-borrowing spouse’s age, if applicable.
The rest of the funds for the purchase come from the HECM or HomeSafe loan. This allows you to keep more assets to use as you wish, as compared to paying the down payment with cash, while still having no required monthly mortgage payments.
Yes YOU can! A HECM (Home Equity Conversion Mortgage) reverse mortgage for Purchase or HomeSafe for Purchase, FARs proprietary reverse mortgage for purchase, are tools that allow borrowers to purchase a new home with a reverse mortgage loan. The process is similar in some ways to using a forward mortgage to purchase a new home. The borrower still needs to work with a real estate agent on the transaction, and many of the same closing costs and timeframes apply.
Older homeowners often find themselves wanting (or needing) to RELOCATE to be closer to family members, DOWNSIZE to a more manageable home, or even UPSIZE to a retirement dream home on the beach, golf course, or active adult community. The reverse mortgage for purchase tool can be an ideal solution for accomplishing your retirement relocation goals.
Up-front costs may include a property appraisal fee, origination fee, closing costs, mortgage insurance premium, a modest charge for HECM counseling (if applicable), and a servicing fee. You can roll most of the up-front costs into the loan to minimize out-of-pocket expenses. While closing costs vary based upon the type and size of the loan, they’re similar to those for any traditional mortgage. During the life of the loan, interest and a monthly insurance premium accrue. An FAR Reverse Mortgage Specialist will give you a detailed breakdown of the up-front costs and loan expenses.
You do not have to make principal and interest payments as long as the home remains your primary residence. As long as you meet the loan terms, you do not have to repay a reverse mortgage until the home is sold or the last surviving borrower (or a non-borrowing spouse who meets certain requirements) no longer lives in the home as their primary residence.
Reverse mortgages typically don’t impact regular Social Security or Medicare benefits. But because programs vary from state to state, be sure to consult a benefits professional before entering into a reverse mortgage.
No. Just like a traditional mortgage, as long as you continue to meet the loan terms, such as staying current on property taxes, homeowners insurance, and property charges, you retain full ownership. You can sell the home at any time.
The down payment for your home can come from a number of sources, just like any time you buy a home. The cash you bring to purchase the property may be from the proceeds of the sale of your previous home, or it may be from your savings. It could also be a combination of the two.
A reverse mortgage may help you maintain a quality standard of living throughout your retirement years. Because a reverse mortgage is a tough decision that may affect other family members, we encourage you to involve them in your decision process.
When the home is sold or is no longer your primary residence, it’s time to repay the loan. After the loan is paid off, any remaining equity belongs to you or your estate and can be transferred to heirs.
You can take your funds as a lump sum, a line of credit, or as monthly payments. You can also use a combination of these options.
Yes you can! Please visit Silvernest to sign up and connect with your new housemate.
If you already have a reverse mortgage with FAR, sign up here (https://www.silvernest.com/far) for your complimentary services.
HECM
- The amount of loan proceeds is determined by the age of the borrower and appraised value of the home.
- A financial assessment determines your long-term ability to pay taxes and insurance.
- Undergo required counseling from a HUD-approved agency to answer questions.
- Loan proceeds pay off your current mortgage.
- Cash can be a lump sum, and you can get the remainder as installment payments or a line of credit. The unused portion grows every month, providing a significant cushion for the future (as long as the loan has not matured or a default has not occurred).
- Don’t forget to continue to pay your property charges, such as taxes and insurance and any homeowners association fees.
- With room in your budget after eliminating monthly mortgage payments and more cash in hand (or a growing line of credit), create the retirement you always wanted.
A HECM reverse mortgage is a loan that enables homeowners and homebuyers age 62* and older, to convert some of their home equity into cash, installment payments, or a line of credit. Some loans also let homeowners finance a new home purchase. With a reverse mortgage, you make no monthly mortgage payments. You continue to live in and own your home as long as you uphold the terms of the loan.
Unlike a traditional home equity loan or Home Equity Line of Credit (HELOC), you don’t have to repay a reverse mortgage until the home is sold or the last surviving borrower (or a non-borrowing spouse who meets certain requirements) no longer lives in the home. The homeowners must maintain the condition of the home and stay current with other property costs, including but not limited to taxes and hazard insurance, or else the loan will be called due.
*The age minimum is different for FAR proprietary loans like HomeSafe and EquityAvail unless you reside in a state that maintains the minimum at age 62 for all FAR loans—North Carolina, Texas, or Utah.
To be eligible for a HECM reverse mortgage, you must meet the following criteria:
- You must be age 62 or older.
- The home must be the borrowers’ principal residence.
- The home must meet Federal Housing Authority (FHA) minimum property standards and flood requirements.
- The home must be one of the following property types: single-family home; a two-to-four-unit home with one unit occupied by the borrower; or a HUD-approved condominium. With new construction, you must have a Certificate of Occupancy or equivalent before you apply.
- You must have sufficient home equity. A Reverse Mortgage Specialist from Finance of America Reverse LLC (FAR) can tell you if you have enough home equity to qualify.
In addition to confirming qualifications, our Reverse Mortgage Specialists can help you find out if a HECM is right for your personal situation and understand f the loan details.
How much depends on multiple factors, including the age of the youngest borrower or non-borrowing spouse, your home’s value, the amount of equity, FHA lending limits, the current interest rate, and the reverse mortgage product and payment option you choose. A FAR Reverse Mortgage Specialist can give you a free quote that’s tailored to your specific situation.
The reverse mortgage borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance, and any homeowners association fees. The borrower must maintain the home. If the borrower does not meet these loan obligations, then the loan will need to be repaid.
HomeSafe
- You must be a homeowner 55* or older with some equity.
- The amount of loan proceeds depends on the borrower’s age, interest rate, loan payoff, location, credit profile, the appraised value of the home, and the type of HomeSafe® you choose.
- Proceeds pay off your current mortgage, and you can get the remainder as cash.
- As long as you continue to pay your taxes and insurance and uphold the terms of the loan, you keep the title to your home and live there payment-free. The loan is not due until the last living borrower leaves the home or the home is sold.
- With room in your budget after eliminating mortgage payments and cash in hand, you can create a retirement you feel good about.
*For certain HomeSafe® products only, excluding Massachusetts, New York, and Washington, where the minimum age is 60, and North Carolina, Texas, and Utah, where the minimum age is 62.
- HomeSafe loan limits are higher than the government-insured HECM loans, up to $4 million, while offering similar protections and features to the borrower.
- HomeSafe borrowers enjoy no mortgage insurance premiums, competitive fixed interest rates*, and no out-of-pocket funds required beyond the appraisal (except for purchase). Fees and closing costs are typically rolled into the loan amount.
*For HomeSafe® Standard loans.
We offer HomeSafe products in the following states.
HomeSafe Standard:
Arizona
California
Colorado
Connecticut
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Louisiana
Massachusetts
Michigan
Missouri
Minnesota
Nevada
New Jersey
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina
Texas
Utah
Virginia
Washington
HomeSafe Select:
California
Colorado
District of Columbia
Florida
Georgia
Hawaii
Illinois
Michigan
Minnesota
Missouri
New Jersey
Nevada
North Carolina
Ohio
Oregon
Rhode Island
South Carolina
Texas
Utah
Virginia
A reverse mortgage is a loan that enables homeowners and homebuyers age 55* or older to convert some of their home equity into cash or a line of credit. Some loans also let homeowners finance a new home purchase. With a reverse mortgage, you make no loan payments. You continue to live in and own your home.
Unlike a traditional home equity loan or home equity line of credit (HELOC), you don’t have to repay a reverse mortgage until the home is sold or the last surviving borrower (or a non-borrowing spouse who meets certain requirements) no longer lives in the home, as long as you meet loan obligations. The homeowners must maintain the condition of the home and stay current with property taxes and hazard insurance.
*For certain HomeSafe®️ products only, excluding Massachusetts, New York, and Washington, where the minimum age is 60, and North Carolina, Texas, and Utah, where the minimum age is 62.
The reverse mortgage borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance, as well as homeowners association fees, if any. The borrower must maintain the home. If the borrower does not meet these loan obligations, then the loan will need to be repaid.
HomeSafe Second
A reverse second mortgage offers greater flexibility in repayment – no monthly mortgage payments are required on this loan. You must continue to pay the existing first mortgage payment, property taxes, homeowners’ insurance, flood insurance (when applicable), HOA dues and maintain the home.
As long as the terms of the HomeSafe Second reverse loan and any first lien loan are met, a reverse second mortgage does not have to be repaid until the home is no longer the primary residence of at least one borrower or the home is sold.
Usually, the last surviving borrower or their estate sells the home to repay the loan(s). Existing liens may also be repaid from other assets, proceeds from a life insurance policy, or a loan refinance subject to any first lien loan-related restrictions.
Reverse mortgages have a non-recourse feature, which means that the total amount that you owe on the reverse mortgage can never exceed the appraised value of your home.
However, if your home increases in value, all equity that remains once the reverse mortgage and first liens are paid off belongs to you and your estate.
If you permanently leave the home, the reverse loan servicer will issue a Repayment Notice that states the mortgage is due and payable.
In addition to interest, the costs can include a property appraisal fee, origination fee, closing costs, servicing fee and a modest charge for independent counseling. While closing costs vary based upon the type and size of the loan, they’re similar to those for any traditional mortgage.
You can roll most of the up-front costs into the loan, so out-of-pocket expense can be minimized, and you can reduce your costs by taking a lower amount of proceeds that are available to you. We will give you a detailed cost breakdown and explain the different interest and pricing options available.
As a reverse second mortgage borrower, you can enjoy all the benefits a reverse mortgage can bring to your life, including making no monthly mortgage payments on the reverse mortgage. However, you must, continue to live in the home as your primary residence, pay your homeowner’s insurance, real estate taxes, and any applicable HOA or condominium assessments and fees, keep your first mortgage current when permitted by law, maintain your home, and comply with the obligations in the security instruments.
A reverse second mortgage does not change any of the requirements associated with your first lien mortgage, including the requirement that you make timely payments to your first lien servicer.
Since payments are not being made on the reverse second mortgage, it’s common for some reverse mortgage borrowers to feel like they no longer own their home. This is not the case. A reverse mortgage is just like any other mortgage, meaning that there is a lien on your house that has to be paid back at some time, but you still own your home subject to the lien(s) and your name remains on the title.
You may also be concerned that you could somehow lose your home if you obtain a reverse mortgage. The reverse lender will not be able to foreclose on your home, even if the unpaid balance exceeds the value of your home as long as you continue to manage your responsibilities: live in the home as your primary residence, pay your property taxes, homeowner’s insurance, flood insurance (when applicable), HOA dues, maintain your home, and meet all of the first-lien mortgage obligations (when permitted by state law). If you do not meet these obligations, the loan servicer will attempt to contact you to resolve the situation. We highly recommend you keep an open line of communication with the servicer when any issues arise.
Another common concern is that there will be nothing left of your estate to leave to your heirs once you pass away, or worse, you will end up saddling them with even more debt. The non-recourse feature of a reverse mortgage assures that you and your estate will never owe more than the value of your house. In the event the debt exceeds the value of the home, your heirs simply walk away. This is a worst-case scenario. This relates to the second lien mortgage only. Your first lien mortgage, which has not been replaced or extinguished, may be a recourse loan.
EquityAvail
EquityAvail is a revolutionary retirement mortgage that allows people in or nearing retirement to significantly lower their mortgage payments for 10 years and then eliminate the need to make monthly mortgage payments altogether. It’s a single, fixed-rate mortgage with partial interest payments required for the first 10 years, after which no more monthly payments are required. As long as the borrower upholds the terms of the loan, which include living in the home as their primary residence, staying current on taxes and insurance, and upholding the terms of the loan, the loan does not need to be repaid until the last borrower passes away or sells the home. The loan is fully disbursed at closing, with a maximum loan amount of up to $4 million.
EquityAvail is currently available in Arizona, California, Connecticut, Florida, Georgia, New Jersey, Nevada, South Carolina, Texas, and Virginia.
People 55+ who own and occupy their home as their primary residence, who have an existing forward mortgage, and who would be short to close on a reverse mortgage.
EquityAvail requires partial interest payments for the first 10 years, but after that, there are no monthly mortgage payments required for the remaining life of the loan. The borrower is responsible for all property tax and insurance obligations.
The following property types are eligible:
– Existing Single Family Residence
– Condominium
– 2-4 units
There is no minimum home value for EquityAvail, only a minimum loan amount of $100,000. The maximum lending limit is $4,000,000 although the home value may exceed the lending limit.
Silvernest
It boils down to this:
- You fill out a profile with info about yourself, your home and your preferences in a housemate.
- Homeseekers do the same, indicating what kind of home (and host) they’d like to live with.
- Silvernest software crunches the numbers to show you housemate matches based on your location and how well your preferences line up with others’.
Homesharing is for everybody! Silvernest has seen successful homesharing with retirees, families, young adults and even cross-generational households. The only prerequisites are a desire to earn or save money and a willingness to explore something new.
Homesharing is another example of the sharing economy, like ridesharing or coworking. It’s shared housing in which a homeowner chooses to live together with at least one other non-related person in exchange for rent (and sometimes, in exchange for help around the house).
Homesharing connects people who might not otherwise meet, making life more interesting and opening new avenues for conversation and community. It can also help alleviate social isolation and loneliness, improving both physical and mental health.
Silvernest is a website that uses technology to match hosts and homeseekers based on compatibility, then provides secure messaging, background screens, homesharing agreements and more. Basically, Silvernest has everything you need to create a home sweet shared home.
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