More Questions?  Contact Bruce Anderson

Reverse Mortgage Specialist

505-275-3040

Reverse Mortgages

Home Equity Conversion Mortgage (HECM)

HECM is the most popular reverse mortgage product available accounting for over ninety five percent of all reverse mortgages. Due to its flexibility, variable, fixed rate, and loans based off of both the One Year CMT and LIBOR index are available.

What is a reverse mortgage?
 
A reverse mortgage is a loan that enables senior homeowners, age 62 and older, to convert part of their home equity into tax-free income, without having to sell their home, give up title to it, or make monthly mortgage payments. The loan becomes due when the last borrower (s) permanently leaves the home. 

What are the advantages of a reverse mortgage?
 
 Here are a few of the most significant:

    •   Remain independent and stay in your home. A reverse mortgage allows you to remain in your home and retain home ownership.

    •   No monthly mortgage payments required. You need not pay back the
reverse mortgage loan nor make any monthly mortgage payments until you permanently move out of the home.

    •   Tax-free money. Because the money you receive from a reverse mortgage is not considered income, it is tax free and will not affect your Social Security or Medicare benefits.

    •   Freedom and flexibility. The money you get from a reverse mortgage is
yours to use in any way you choose.

Who can qualify for a reverse mortgage?
 
Seniors 62 years of age or older may qualify. There are virtually no income or credit qualifications.

How do you determine the amount of cash I am eligible for?
 
The amount you can borrow depends on several factors, including your age, the type of reverse mortgage you select, current interest rates and the appraised value of your home. In most cases, the older you are, the more valuable your home, and the less you owe on it, the more money you can get.

Are there any limits on how I use the money I receive from a reverse mortgage?

You can use the money for almost anything you choose, from daily living expenses, home improvements, healthcare expenses, paying off existing debts, or simply enhancing your retirement years. For many people, the money provides a "financial security blanket," in case unexpected expenses arise.

Is there a choice in how I receive the cash from my reverse mortgage?
 
With most reverse mortgages you have a wide range of payment options, one of which may be ideal to meet your financial needs.

• You can choose to receive the money all at once, as a lump sum.
• You can receive equal monthly payments as long as one of the borrowers lives and continues to occupy the property as a principal residence.
• You can choose to receive equal monthly payments for a fixed period of months.
• You can get a line of credit; which allows you to take funds at times and in amounts of your choosing until the line of credit is exhausted.
• Or, finally, you can choose a combination of the above.

If I take a reverse mortgage, will I still have an estate that I can leave to my heirs?
 
When you sell your home or no longer use it as your primary residence, you or your estate must repay the lender the balance due on the Reverse Mortgage.  Any remaining equity belongs to you or your heirs. It's important to remember that you can never owe more than the home's appraised value when it is sold. None of your other assets will be affected by your reverse mortgage loan.

Have there been recent changes to the reverse mortgage program? 

Yes, in 2009 the Home Value or Loan Limits have increased to $625,000 and you can purchase  a new primary residence with a Reverse Mortgage. In the past, all Reverse Mortgages have been limited to refinances and loan limits of $200,160.