Reverse Mortgage Loans
Reverse mortgage loans enable persons age 62+ to get cash (a loan) that is not paid back until you
move out of your home, no matter how long that turns out to be. This loan relies only on home equity,
so advanced age, low income, and even bad credit (except debt to the Federal Government), does not
prevent this loan from going through.
The most popular form of Reverse Mortgage is the Home Equity Conversion Mortgage (HECM) which is the
one described here. The HECM loan is done through private lenders who compete for your business, but
these loans are backed 100% by the Federal Government through the Department of Housing and Urban
How Much Can I Borrow?
The chart below gives examples of the amount of money available at the interest rate of 3.97%. The
interest rate in the discussion here is variable monthly (a slightly higher, variable yearly rate is also
offered); the lower the interest rate, the more money that will be available to the homeowner.
There are several choices for taking the money available; a line of credit, a monthly payment for life
(“tenure”) for a specified period, or any combination of these methods. Notice that the older you are, the
greater the amount available.
Tenure Monthly Payment (by age)
Line of Credit
or Cash Advance by Age
* The Maximum Claim Amount is either the FHA lending limit in the County, or your home value,
whichever is less.
Pros and Cons of Reverse Mortgages
• A free educational session conducted by a trained counselor is required before you enroll with a lender.
• A “low” interest rate applies and accumulates only on the funds borrowed so far.
• No repayment until you move; for co-owners, no repayment until you both move.
• Existing mortgages will be paid off with Reverse Mortgage Funds (as long as there are enough proceeds
to do so).
• If you are receiving public benefits (such as SSI or Food Stamps), Reverse Mortgage proceeds can be
managed in a way that does not interfere with benefits.
• No monthly mortgage payments.
• High start-up costs. While these are not paid out of pocket, there is an immediate debt on the home. So
this loan is costly if you move out of the home soon.
• Required repairs must be less than 15% of the home value (if repair needs are greater, other programs
may help - ask your counselor).
• Any existing mortgage must be paid off, so if existing debt is too large, the Reverse Mortgage might not
provide enough money to do so.
For more information, visit the Internet at www.aarp.org, or call one of the reverse mortgage resources
Call to receive the free booklet, “Reverse Mortgage Loans, Borrowing Against Your Home.”
Department of Housing and Urban Development (HUD)
HUD’s reverse mortgage lender’s list.
National Center for Home Equity Conversion
National Reverse Mortgage Association of Lenders
US Department of Veteran’s Affairs
Reverse Mortgage Lenders
American Mortgage Service Co.
11503 Springfield Pk., 45246
Wells Fargo Home Mortgage