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For more information on purchasing a home using a Reverse Mortgage, go HERE
Reverse Mortgage Basic Information
and Frequently Asked Questions
What is a Reverse Mortgage?
A Reverse Mortgage is a home loan (used for any purpose) specifically designed for seniors 62 or older. A reverse mortgage is also known as a HECM - Home Equity Conversion Mortgage. The most common reverse mortgage is insured under the FHA program by the Department of Housing and Urban Development (HUD).
Why is it called a Reverse Mortgage?
It is called a reverse mortgage because instead of making payments to the lender like with a traditional (forward) mortgage, a Reverse Mortgage allows you to borrow money or pay off your existing mortgage without the responsibility of having to make regular monthly payments.
How much can I borrow and how do I access funds?
With a reverse mortgage you will have access to a percentage of the appraised value of your home. You can access funds in any combination of three different methods.
- Regular monthly installments paid to you
- A lump sum advance at closing
- As needed through use of a line of an established line of credit.
If you are only lending me a percentage of the value of my home, what happens to the rest of it?
All of the remaining equity in your home belongs to you just as it does today. The loan does not get paid back until you leave or sell the house. At that time after the reverse mortgage is paid off, any remaining equity goes to you or your heirs.
Who will own my house?
One of the most common misconceptions about a reverse mortgage is that you are somehow giving up ownership in your property or signing your home over to the bank. A reverse mortgage is nothing more than a loan. You continue to own your home just as you always have. Title does not change hands, you maintain full control and can sell it when you want or stay forever, the choice is yours. When the house is sold all remaning equity after the loan is repaid belongs to you our your heirs.
Is it too good to be true? How does the lender get paid?
The loan balance including any interest that has accrued gets paid back to the lender when the loan is paid off. This typically happens when the house is sold by you or your heirs.
When does it get paid off?
A reverse mortgage only has to be paid off when you permanently leave the home. It gets paid the same way all other mortgages are paid off. When the house is sold, the balance due is paid to the lender and you or your heirs keep any and all remaining equity.
What are some of the benefits of a reverse mortgage?
- Personal and financial independence.
- Pay for health care or other needs.
- Purchase a new home.
- Pay for needed Home Improvements.
- You can never lose your home as long as you maintain the property tax and insurance payments.
- The loan is only paid off when the house is sold by you or your heirs, or all borrowers move out of the house.
- Keep your Medicare or Social Security benefits.
- Use it as a credit line and draw upon it as needed.
- Get all your cash right away.
- Get the best of both—get cash now and have a balance in reserve to use as a credit line.
- No Income Requirements: The homeowner does not need to be working and is not qualified based on income.
Here's how it works...
As you receive monthly cash income, the loan balance increases. As you withdraw money from the loan , the balance grows. None of it, the interest or the principal balance gets paid back until you permanently leave the home. You retain title and ownership to your home the whole time.
For more information about our low rate Reverse Mortgage programs, call today 888-562-6510.
Southern Trust Mortgage is a member in good standing of
the National Reverse Mortgage Lenders Association
and subscribes to it's Code of Ethics.
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