What is a reverse mortgage in simple terms?

A reverse mortgage is a type of loan for seniors ages 62 and older. Reverse mortgage loans allow homeowners to convert their home equity into cash income with no monthly mortgage payments. Most reverse mortgages are federally insured, but beware of a spate of reverse mortgage scams that target seniors.

Does your house have to be paid off for a reverse mortgage?

Reverse mortgage loans typically must be repaid either when you move out of the home or when you die. However, the loan may need to be paid back sooner if the home is no longer your principal residence, you fail to pay your property taxes or homeowners insurance, or do not keep the home in good repair.

What happens to a house with a reverse mortgage when the owner dies?

When a person with a reverse mortgage dies, the heirs can inherit the house. But they won’t receive title to the property free and clear because the property is subject to the reverse mortgage. So, say the homeowner dies after receiving $150,000 of reverse mortgage funds.

How much do you have to put down on a reverse mortgage?

The buyer’s minimum required down payment generally works out to be about 45% to 62%* of the sale price. This calculation is determined by the Department of Housing and Urban Development (HUD). † These are age-based loans that allow older borrowers to qualify for more in loan proceeds (see chart below).

Can a family member take over a reverse mortgage?

Unfortunately, however, you can’t add a family member to an existing reverse mortgage.

Who holds the deed in a reverse mortgage?

No. When you take out a reverse mortgage loan, the title to your home remains with you. Most reverse mortgages are Home Equity Conversion Mortgages (HECMs). The Federal Housing Administration (FHA), a part of the Department of Housing and Urban Development (HUD), insures HECMs.