​Reverse Mortgage Loans

A reverse mortgage is a way to turn a portion of the equity in your home into cash which is usually tax free*1 without having to make monthly mortgage payments. Instead of monthly payments, the loan is taken against a senior’s home equity and repaid in one lump sum when the last borrower leaves the home. As part of the loan, the borrower is required to continue paying property taxes, insurance and maintenance (and HOA fees, if applicable). These loans can potentially help seniors manage their living expenses.
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*1 This information does not constitute tax advice. Please consult a tax advisor regarding your specific situation.

Reverse Mortgage Eligibility​

• One homeowner must be 62 years or better
• Own your home outright, or have a substantial amount of equity
• Home is required to be your primary residence (live in your home 6+ months per year)
• Property must be a single-family home, 2- to 4-unit dwelling or FHA-approved condo
• For a home purchase, you must have an adequate down payment for your new home based on your several factors including your age, current interest rate and the lesser of the home's purchase price or appraised value*2

​*2 Not available in all areas. Please contact your Fairway reverse mortgage planner for more details.

Potential Advantages of a Reverse Mortgage

Receive money from your home equity which is usually tax free.*3
A reverse mortgage makes payments to you from your accumulated home equity, which may enhance and extend your retirement goals. You can receive your money in a lump sum, line of credit, monthly payment or a combination of all three. However, if you choose a line of credit, you may have the option of paying down the line if you want to have less cash and increase your equity. 

*3 This information does not constitute tax advice or financial planning advice. Please consult a tax and/or a financial advisor for your specific situation.
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• Eliminate your monthly mortgage payment.
  With a reverse mortgage, you will not be required to make a monthly mortgage payment during your lifetime as long as you live in the home as your primary residence, pay taxes and insurance, and maintain the home (and pay HOA fees, if applicable).
• Never owe more than what the home is worth.*4
  When you permanently move out of your home, whether you sell it or pass away, neither your estate nor your heirs are responsible to pay the deficit if the balance owed on your reverse mortgage exceeds the home value. If your heirs want to keep your home, they can purchase it for 95% of the current appraised value.   

*4 There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes, insurance and maintenance (and HOA fees, if applicable). Credit is subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.

• Bridge the Medicare gap from age 62 to 65.*5
  Many seniors delay retirement until they are 65, because they cannot afford to pay for their health insurance before Medicare kicks in. By utilizing proceeds from a reverse mortgage, you may be able to avoid or minimize using other retirement assets during this time.

*5 This information does not constitute financial planning advice. Please consult a financial planner for your specific situation.

• Delay Social Security payments to increase monthly income.*6
  If you have not drawn Social Security yet, you should consider discussing this with your financial and tax advisors. 

*6 This information does not constitute tax advice or financial planning advice. Please consult a tax and/or a financial advisor for your specific situation.
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• Pay for long-term care expenses.
  With the proceeds from a reverse mortgage, you may be able to purchase long-term care insurance to handle these expenses.​

​Types of Reverse Mortgages

Proprietary Reverse Mortgages
Private loans backed by the companies that develop them.

Home Equity Conversion Mortgages (HECMs)
Federally-insured reverse mortgages backed by the U. S. Department of Housing and Urban Development (HUD). HECM loans enable you to withdraw a portion of your home’s equity and can be used for any purpose. How much you can borrow with a HECM or proprietary reverse mortgage depends on several factors, including:

• your age
• the type of reverse mortgage you select
• the appraised value of your home
• current interest rates, and
• a financial assessment of your willingness and ability to pay property taxes, homeowner’s insurance, and maintain the home.

HECM for Purchase (H4P)
An H4P (a type of HECM), if available in your area, enables senior homebuyers to purchase a new primary residence that better suits their needs and obtain a reverse mortgage in one transaction. You can use an H4P if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing. The amount of down payment required is based on several factors, including the borrower’s age, interest rate, and the lesser of the purchase price or appraised value of the home. This type of HECM reverse mortgage, if it is offered in your area, may allow you to:

• Build a new customized home
• Relocate closer to friends and family members
• Purchase a home in senior housing community
• Downsize to a smaller, easier-to-maintain home
• Purchase a primary residence suitable for your current needs
• Move into a new home that’s easily accessible with modern amenities

Single Purpose Reverse Mortgages
Offered by some state and local governmental agencies, as well as some non-profit organizations, but they’re not available everywhere. This is the least expensive option, but they can only be used for one purpose, which the lender specifies.
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Reverse Mortgage Disclaimer:
Borrowers must be age 62 or over and the home must be their primary residence. Homeowners must complete counseling with a government-certified counselor before applying. Homeowners must pay property taxes, insurance, and homeowner’s association dues. Consult a tax professional for tax consequences. A reverse mortgage is a loan and must be repaid. Loan amount based on equity in your home. Payout available in lump sum or in regular scheduled payments. Proceeds will not affect Social Security or Medicare Benefits. There’s no need to repay the loan as long as you continue to live in the house and maintain the property to FHA standards. This is not a commitment to make a loan. Loans are subject to borrower and property qualifications. Interest rates and program guidelines are subject to change without notice.