1. What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to the borrower. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD's reverse mortgage provides these benefits, and it is federally-insured as well.

2. Can I qualify for a HUD reverse mortgage?
To be eligible for a HUD reverse mortgage, HUD's Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own the borrower’s home outright, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home. The borrower are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan. The borrower can contact the Housing Counseling Clearinghouse on 1-800-569-4287 to obtain the name and telephone number of a HUD-approved counseling agency and a list of FHA approved lenders within the borrower’s area.

3. Can I apply if I didn't buy my present house with FHA mortgage insurance?
Yes. While the borrower’s property must meet HUD minimum property standards, it doesn't matter if the borrower didn't buy it with an FHA-insured mortgage. The borrower’s new HUD reverse mortgage will be a new FHA-insured mortgage loan.

4. What types of homes are eligible?
The borrower’s home must be a single family dwelling or a two-to-four unit property that the borrower own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved. It is possible for condominiums to qualify under the Spot Loan program. The home must be in reasonable condition, and must meet HUD minimum property standards. In some cases, home repairs can be made after the closing of a reverse mortgage.

5. What's the difference between a reverse mortgage and a bank home equity loan?
With a traditional second mortgage, or a home equity line of credit, the borrower must have sufficient income versus debt ratio to qualify for the loan, and the borrower are required to make monthly mortgage payments. The reverse mortgage is different in that it pays the borrower, and is available regardless of the borrower’s current income. The amount the borrower can borrow depends on the borrower’s age, the current interest rate, other loan fees, and the appraised value of the borrower’s home or FHA's mortgage limits for the borrower’s area, whichever is less. Generally, the more valuable the borrower’s home is, the older the borrower are, the lower the interest, the more the borrower can borrow. The borrower doesn't make payments, because the loan is not due as long as the house is the borrower’s principal residence. Like all homeowners, the borrower still are required to pay the borrower’s real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, the borrower cannot be foreclosed or forced to vacate the borrower’s house because the borrower "missed the borrower’s mortgage payment."

6. Can the lender take my home away if I outlive the loan?
No! Nor is the loan due. The borrower do not need to repay the loan as long as the borrower or one of the borrowers continues to live in the house and keeps the taxes and insurance current. The borrower can never owe more than the borrower’s home's value.

7. Will I still have an estate that I can leave to my heirs?
When the borrower sell the borrower’s home or no longer use it for the borrower’s primary residence, the borrower or the borrower’s estate will repay the cash the borrower received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in the borrower’s home, if any, belongs to the borrower or to the borrower’s heirs. None of the borrower’s other assets will be affected by HUD's reverse mortgage loan. This debt will never be passed along to the estate or heirs.

8. How much money can I get from my home?
The amount the borrower can borrow depends on the borrower’s age, the current interest rate, other loan fees and the appraised value of the borrower’s home or FHA's mortgage limits for the borrower’s are, whichever is less. Generally, the more valuable the borrower’s home is, the older the borrower are, the lower the interest, the more the borrower can borrow.

9. Should I use an estate planning service to find a reverse mortgage?
I've been contacted by a firm that will give me the name of a lender for a "small percentage" of the loan? HUD does NOT recommend using an estate planning service, or any service that charges a fee just for referring a borrower to a lender! HUD provides this information without cost, and HUD-approved housing counseling agencies are available for free, or at minimal cost, to provide information, counseling, and free referral to a list of HUD-approved lenders. Before the borrower agree to pay a fee for a simple referral, call 1-800-569-4287, toll-free, for the name and location of a HUD-approved housing counseling agency near the borrower.

10. How do I receive my payments?
The borrower have five options:
• Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term - equal monthly payments for a fixed period of months selected.
• Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower's choosing until the line of credit is exhausted.
• Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
• Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.