With a reverse mortgage, you can use the equity in your home to receive loan proceeds in the form of a lump sum, monthly payments, a line of credit, or a combination of these. As with any other loan, terms and payouts are determined by the product, fees and interest rate.

Reverse mortgage loans typically must be repaid either when you move out of your home or when you pass away. However, the loan may need to be paid back sooner if the home is no longer your principal residence, if you do not pay property taxes or homeowners insurance, or if you do not keep the home in good condition. One of the great benefits of a reverse mortgage is that it is a non-recourse loan, meaning that no matter when the loan comes due, it can only be paid back from the home.

Loan proceeds are determined by the youngest borrower’s age, the product type and the corresponding interest rate. To estimate how much you are eligible for, get in touch with your mortgage broker who can run the numbers!

Basic requirements for reverse mortgage eligibility include the following:

• All borrowers are at least age 60**
• The subject property is a borrower's primary residence and has an acceptable appraisal
• There is sufficient equity in the home
• Borrower passes product specific residual income and credit requirements
• Borrower completes reverse mortgage counseling

**age requirements differ by product and state

A reverse mortgage can help in numerous ways; here are three of the most common ways a reverse mortgage helps the borrower:

1. Eliminates monthly mortgage payments*
2. A reverse mortgage means payment optionality, freeing up cash that was being paid monthly to a traditional mortgage
3. *Borrower must pay property taxes, insurance, HOA fees and maintain the property

1. Allows you to stay in your home and not be home trapped
2. Your home stays in your possession and as long as you maintain the loan requirements, such as paying property taxes and insurance, and HOA fees, so you have the safety to stay in your home.

3. Access to extra cash that can continue to grow
4. The extra cash you receive is tax-free. Your money can be used at your discretion but are commonly used for paying off debt, making home repairs or upgrades, or supplementing monthly income. If you receive loan proceeds in the form of a line of credit, the unused portion continues to grow.

A reverse mortgage typically follows the same blueprints but can vary in small ways. The most common type of reverse mortgage is a HECM - a federally insured loan. Smartfi Home Loans also offers a proprietary reverse mortgage - the Smartfi Choice, designed to open up possibilities for borrowers whose needs or qualifications don't quite fit those of a HECM.

Yes!  With a reverse mortgage, the title to the home remains with the borrower. The bank/lender never owns your home.

1. Submit an initial application
2. Work with your mortgage broker to review your goals and make an initial application to determine what loan options are best for you.
3. Attend reverse mortgage counseling
4. To ensure you have the knowledge and tools to make an informed decision, you will need to complete a HUD-approved counseling session, either over the phone or in-person.

3. Sign and submit your completed application
4. Once you have your counseling certification and required documentation together, you will submit everything to your mortgage broker.

4. Appraisal and underwriting
5. An appraisal of your home will be completed (HECMs require it be done by an FHA-approved appraiser). The appraisal and all other documentation will then be sent to underwriting for approval.

5. Closing and funding
6. Upon underwriting approval, your final loan documents will be delivered to you and a notary will assist in signing. Once your closing documents are signed (and if applicable, your three-day rescission period is over), the funds will be released to you.
7. A rescission period is a time when you can cancel the loan with no penalty

The benefits of a reverse mortgage are numerous and include, but are not limited to:

• Eliminating required monthly mortgage payments*
• Allowing you to stay in your home and in possession of your home
• Having access to tax-free cash
• Non-recourse loan - never owing more than your home's worth
• Giving you freedom to spend your cash on what you need or want
• Gives your heirs the option to purchase the home after you pass
• Only pay interest on funds used
• Unused line of credit grows over time
• Payments made throughout the life of the loan increase equity and pay down the loan balance

*Borrower must pay property taxes, insurance, HOA fees and maintain the property

For most reverse mortgages, when a qualifying event occurs, the loan balance becomes due.

A qualifying event that causes the loan to become due are any of the following:

• If the borrower fails to meet their obligations under the mortgage (such as paying property taxes and insurance, and maintaining the property)
• When the last surviving borrower or eligible non-borrowing spouse:
  • Passes away
  • Sells their home
  • No longer lives in the home as their primary residence (is either living in another residence for more than 6 consecutive months or is in a healthcare facility for more than 12 consecutive months)

Yes! You can pay off your reverse mortgage at any time.

Note: If you pay your HECM line of credit to $0, it will close the line of credit. A minimum balance of $100 is required to keep the line of credit open.

No, you can use your reverse mortgage to access a line of credit which can be utilized at your discretion. If you want to simply keep it as a safety net and avoid tapping into it, that's completely up to you! Remember, you will only pay interest on funds used. Do note that a HECM line of credit requires a minimum balance of $100 to keep it open.

While very similar, there are a few primary reasons to choose a reverse mortgage over a home equity line of credit. A reverse mortgage gives you until you leave the home to use the funds (which could be up until you pass away), it provides payment optionality, and any unused credit continues to grow. A home equity line of credit has a limited amount of time that it can be used, requires payments, and its line of credit can fluctuate with the market.

Unlike traditional mortgages and home equity lines of credit, a reverse mortgage does not require you to make monthly mortgage payments* until the borrower has experienced a qualifying event or passed away.

You have options when it comes to paying back the loan:

1. Pay it in one lump sum when the last borrower leaves the home.
2. Make scheduled payments throughout the life of the loan. That means paying any amount and pausing, adjusting, stopping or starting at any time.
3. Make non-scheduled payments for any amount, at your discretion. You'll pay the remainder of the loan balance when the last borrower leaves the home.

*Borrower must pay property taxes, insurance, HOA fees and maintain the property

Yes! A Reverse for Purchase allows you to buy a home using the proceeds from the sale of your current residence, and the equity in the house you are purchasing, to buy your new home outright. By doing so, you’ll have no monthly mortgage payment* and can enjoy retirement in the home of your dreams.

*Borrower must pay property taxes, insurance, HOA fees and maintain the property

HECM stands for Home Equity Conversion Mortgage. It is a reverse mortgage that is insured by the Federal Housing Administration which makes it subject to certain requirements and limitations. It is a non-recourse loan, ensuring you never owe more than your home's value.

A Home Equity Conversion Mortgage (HECM) is insured by the Federal Housing Administration. However, when choosing a Smartfi Choice, your loan will be insured through private mortgage insurance.

You can access the equity in your home through a lump sum, monthly payments, a line of credit, or a combination of any of these.

No, if you outlive the equity in your home you will continue to receive your scheduled disbursements.

Funds can be used for almost anything but are commonly used for paying off an existing mortgage, eliminating credit card debt, covering healthcare costs, maintaining a growing line of credit for future needs, repairing or remodeling your home, and/or improving your lifestyle.

Your children have options when it comes to your home. Typically, the loan is repaid through the sale of the home. Your heirs can choose to sell the home, pay the loan and receive any remaining equity; or, they can purchase/refinance the home, potentially at less than the appraised value, and pay back the loan with a traditional mortgage.