Five of these agencies are mandated by the FHA, including the National Council on Aging. Before committing to a loan with time constraints, please check with us to see if your state has this requirement.Īs a HUD-approved lender, we must provide a list of at least 10 counseling agencies to choose from. Certain states have additional “cooling-off” requirements, prohibiting lenders from proceeding for specified periods after completing third-party counseling.

You must sign and deliver this certificate to us as part of your loan application. You will be issued a counseling certificate upon completing your counseling session.

It will explore potential alternatives, such as downsizing or applying for city or state grants.įor a thorough budget analysis, counselors will need information about the following:.

It will review your unique financial situation.

The counseling agency’s role is multifaceted: Depending on your location, counseling sessions may take place over the phone or in person. The only way to access additional funds at that point would be to refinance the loan with a new one.Īll borrowers applying for a federally insured HECM loan must undergo reverse mortgage counseling. If you use less than your total proceeds or decide to repay a part of the loan, you cannot draw from the loan again. Remember, the fixed-rate loan is a single-draw loan. For example, if you need $30,000 for home renovations but qualify for an $80,000 loan, you might opt for the smaller amount.

Paying off a substantial mortgage to eliminate monthly payments.Ĭhoosing a fixed-rate option for the lump sum allows you to decide how much of your home equity you want to utilize up to your maximum benefit amount.

These circumstances could include the following:

Both options also offer a modified term/line of credit plan or a modified tenure/line of credit plan, combining fixed payments and a line of credit.Ī lump-sum disbursement might be the right choice if a large, immediate payment is necessary.

Taxes and insurance must still be paid promptly to avoid defaulting on the loan.

Under tenure payment, payments only stop upon the borrower’s death or permanent home exit.

For instance, a 65-year-old planning to defer Social Security until age 70 can use term payments to supplement income for the next five years.

Some borrowers utilize term payments to delay claiming Social Security benefits, using these funds to boost their income.Term payments provide borrowers with fixed payments for a set period, while tenure payments allow for monthly payments throughout the life of the loan, even exceeding the home’s value. It can benefit those who don’t immediately need the funds but wish to have a financial safety net.If left untouched, the line of credit grows over time, maximizing borrowing potential.Borrowers can access funds only when needed, which may help manage living expenses.The line of credit is the most popular option among borrowers for receiving their reverse mortgage funds.

Here are the available payment options and their associated considerations: The choice of method often depends on the reason for acquiring a reverse mortgage or the strategic plan behind it. There are various ways in which borrowers can receive their loan proceeds. TYPES OF PAYMENT OPTIONS FOR REVERSE MORTGAGES Since its inception, the reverse mortgage program has helped thousands of homeowners like you safely access a portion of the equity in their homes to enjoy their retirement years better. Since 1989, the HECM has been insured by the federal government through the Federal Housing Administration (FHA), a division of HUD. There is never a prepayment penalty, so they can make any payment they wish, including repaying the loan at any time. The amount borrowers receive is determined by the HUD calculations based on the age of the borrowers (specifically, the age of the youngest borrowing or non-borrowing spouse), the value of the home, or the HUD lending limit, whichever is less, and the interest rates in effect at the time.īorrowers never have to make a monthly payment on reverse mortgage loans. The borrower maintains the home’s title and is responsible for property taxes and homeowner’s insurance payments. No payment is required until the last surviving homeowner moves, dies, or sells the home. This type of loan allows borrowers to access a portion of their tax-free equity without making monthly mortgage payments. The home must be your primary residence (that means that you, the borrower, must live in the home for as long as you have the loan). A reverse mortgage is a loan secured by your home.

Arlo reverse mortgage calculator