Reverse Mortgage Loan Blog

Question: I’m curious about the whole “reverse mortgage” process. Although I’m probably 35 years from retirement, I’ve been following the Social Security and Medicare debate, which is all doom and gloom, so I wanted to know how reverse mortgages work. Do you have to own your home free and clear to qualify for a reverse mortgage? What’s in it for the mortgage lender? How do they profit? And what happens to the mortgage if the homeowner dies? What if the house is willed to a family member? What then?

Answer: Reverse mortgages are available to those aged 62 and older. A home need not be free and clear of all debt, but homes with no mortgage balance or a small mortgage balance are the best candidates for a reverse mortgage, or what HUD calls a “home equity conversion mortgage” or HECM.

When an individual dies or moves away from the property the balance owed on the reverse mortgage is due and payable. This typically means that the property must either be sold or refinanced. If sold, any cash above the debt would be part of the owner’s account or estate. If refinanced by an heir the property could be retained.

Found here.

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