Do You Qualify for a Reverse Mortgage?

Valley Wide Homes Real Estate Podcast with Craig Barton

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Today, we’re going to discuss how seniors can take advantage of buying a home with an FHA-insured reverse mortgage and eliminate their monthly mortgage payments. Also, if you own your home and have 35% equity, you can refinance using a reverse mortgage and get rid of your mortgage payments. Neat, huh?

The Federal Housing Administration created the reverse mortgage purchase program back in 2008 to make it easier for seniors to downsize or relocate. With a traditional mortgage, the buyer would have to come up with a down payment, closing costs, and then make a monthly mortgage payment for the life of the loan. With a reverse mortgage, no payments are due.

You need to be 62 years old and have a 35% down payment, or you can have 35% equity in your home and refinance using the reverse mortgage. The home must be your permanent mortgage. Although you won’t have to make any mortgage payments, you still have to pay property taxes and home insurance.

When the borrower no longer lives in the house due to selling, moving, or death, the loan and the interest come due. If the home is sold for more than the amount of the interest and the loan, the homeowner or their heirs will receive the difference. If the house is worth less than what is due, the FHA covers the remaining balance. Because the reverse mortgage is a non-recourse loan, the heirs are not responsible to cover the difference when the house is sold.

If you have any questions, give me a call or send me an email. I would be happy to help you!