· Borrowers: Reverse mortgages were designed for older people to tap their home equity to increase their monthly cash flow without the burden of monthly.

A reverse mortgage is a special type of home loan only for homeowners who are 62 and older. This is because interest and fees are added to the loan balance each month. As your loan balance increases, your home equity decreases. Warning: A reverse mortgage is not free money. It is a loan that homeowners or their heirs will have to pay back eventually, usually by selling the home.

A reverse mortgage allows homeowners who are at least 62 years old to use home equity to supplement their retirement income. reverse mortgages, also called home equity conversion mortgages, aren’t like conventional forward mortgages in that you do not make monthly mortgage payments.

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Primary lien: A reverse mortgage must be the primary lien on the home. Any existing mortgage must be paid off using the proceeds from the reverse mortgage. Occupancy requirements: The property used as collateral for the reverse mortgage must be the primary residence. Vacation homes and investor properties do not qualify.

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Once your reverse-mortgaged home is sold or foreclosed, or you die, its sale proceeds will go to pay off that mortgage first. Only after a senior reverse mortgage’s lien is paid off will junior.

The HUD reverse mortgage loan to value ratio depends on the borrower’s age, the current interest rate and the value of the home. For 2019, the maximum reverse mortgage loan amount is $726,525. Larger loans, also known as jumbo reverse mortgages, are available from private lenders.

What is a Reverse Mortgage? Reverse Mortgage Eligibility. To be eligible for a reverse mortgage loan, Eligible Homes Types for Reverse Mortgages. Most single-family homes, Distribution of Funds. Borrowers may access the greater of 60 percent of the principal limit amount.

On the plus side, your heirs can satisfy the reverse mortgage debt by selling the home or purchasing the property for 95% of its appraised value. However, sometimes the home depreciates in value or the debt grows so large that there’s no equity left in the home when the reverse mortgage comes due. "Reverse mortgages are non-recourse loans.