A Reverse Mortgage is a unique type of loan that lets you convert a portion of the equity in your home into tax-free cash. Unlike a traditional mortgage that you pay back each month, a Reverse Mortgage pays you and no repayment is required until you no longer live in the home.

Homeowners 62 and older who own and live in their homes are eligible to participate in a variety of reverse mortgage programs. While the most popular program is the FHA Insured Home Equity Conversion Mortgage (HECM), there are also proprietary and jumbo programs issued by private lenders depending on market conditions. Eligibility requirements are generally the same on all of the reverse mortgage programs and since you are not making payments, there are no income, credit, or health requirements.

ELIGIBILITY:
Borrowers must be at least 62 years of age 
You must own the property but you can have an existing mortgage
The property must be your primary residence
You must go through reverse mortgage counseling to make sure a reverse mortgage is right for you
Reverse Mortgage loans require no repayment as long as your home is your primary residence and you fulfill the following obligations:
Pay your property taxes and insurance 
Maintain the property in reasonable condition
You do not pay back the money that you borrowed including the interest and fees until you sell or permanently move out of your home.

The loan is due when the last borrower on title moves out of the home, sells the home or passes away. The amount owed will always be the lesser of your loan balance or the market value of the home. Even if the amount you borrowed should exceed the value of the home, you, your heirs or your estate can never owe more than the value of your home at the time it is sold. All sales proceeds in excess of what is owed belong to you, your heirs or your estate. This is the non-recourse feature of all reverse mortgage loans.

In the case of the HECM reverse mortgage program, you are charged an insurance premium each month that will be added to your loan balance. The Mortgage Insurance Premium (MIP) charged by FHA is 2% of the appraised value of the home plus an additional .5% annually. These costs are normally built into the loan amount. Unlike the loan balance of a conventional mortgage, which becomes smaller with each monthly payment, the loan balance on a reverse mortgage grows larger over time since you are not making payments.

The amount of money that is available to a homeowner is based upon the following criteria:

LOAN AMOUNT BASED UPON:
Age of the youngest borrower
Current interest rates 
Appraised value of your home
Generally speaking, the more valuable your home, the older you are, and the lower the interest rate, the more you can borrow:

HOW WILL I RECEIVE MY MONEY:
Lump Sum  -  You can request the entire benefit upon funding
Tenure  - Equal monthly payments indefinitely as long as at least one borrower continues to occupy the property as their primary residence.
Term  –  Equal monthly payments for a fixed period of months or years.
Line of Credit  – You can leave the money with the lender indefinitely and the creditline grows on an annual basis. The rate at which it grows depends upon the program. Access is easy and generally takes 5 business days to receive the funds.
Any combination of the above

PROPERTIES THAT QUALIFY FOR A REVERSE MORTGAGE
Single-family residences, 1-4 unit dwellings, condominiums, mobile homes and manufactured homes can all qualify for a reverse mortgage with certain requirements and restrictions especially for mobile homes and manufactured homes. As with all reverse mortgages, the home must be your primary residence. As the reverse mortgage industry evolves, new reverse mortgage programs are being designed for other property types property, so do not despair if your property does not presently qualify. Also, lending limits have tended to rise over time, which can increase the amount of cash proceeds available to new borrowers.

CLOSING COSTS
All reverse mortgage programs have closing costs and fees. Almost all borrowers finance their closing costs requiring no out-of-pocket expenses. The costs and fees include standard closing costs such as appraisal, title insurance, and taxes. Also, there will be an origination fee and usually mortgage insurance, depending on the type of reverse mortgage you choose. Mortgage Trust will provide you with a Good Faith Estimate that is designed to show you a list of the estimated fees and expenses.