Reverse Mortgage Loans
     		Stimulus Raises Lending Limits to $625,500 to December 31, 2011
    
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how reverse MORTGAGES work
   
A Reverse Mortgage is a 'Safe and Highly-Regulated Program' designed to give older homeowners greater financial security. The program allows homeowners age 62 and older to use their home value while maintaining ownership, without creating a monthly debt.
    
Homeowners can receive payments in a lump sum, on a monthly basis (for a fixed term or for as long as they live in the home), or on an occasional basis as a line of credit. Homeowners whose circumstances change can restructure their payment options.

Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the borrower lives in the home.

   
Lenders recover their principal, plus interest, when the home is sold or refinanced by the heirs. The remaining value of the home goes to the homeowner or to his or her survivors. If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage.  

There are no asset or income limitations on borrowers receiving HUD's reverse mortgages.
 
HUD's reverse mortgage program collects funds from insurance premiums charged to borrowers. Senior citizens are charged 2 percent of the home's value as an up-front payment plus one-half percent on the loan balance each year. These amounts are financed by the lender and charged to the borrower's principal balance.
 
FHA's mortgage insurance guarantees to the borrowers that they will continue to receive their loan proceeds even if the Lender goes bankrupt.  The FHA insurance also guarantees Lenders that they will get their money back with interest and fees even if the homeowners outlive the longevity tables or the property values decrease.  Thus while the FHA mortgage insurance increases the initial cost of getting a HECM reverse mortgage, it also allows the Lenders to sell HECM reverse mortgages at interest rates well below those of FannieMae and private lenders." 

  Frequently Asked Questions How Do Reverse Mortgages Work
  Types of Reverse Mortgage Loans RM's as an Estate Planning Tool
  How Much Money Can You Borrow Long Term Care and Reverses

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