How reverse mortgages work

There are two types of reverse mortgages: the FHA Home Equity Conversion Manager (HECM) and the Fannie Mae HomeKeeper. Both are nonrecourse loans, which means that no matter how high the loan balance grows, you or your heirs never owe more than the home's market value. No payment is required on your loan during your lifetime as long as you occupy your home. Your heirs have one year to pay off the mortgage at a low 3% to 4% interest rate. You retain 100% ownership of your home and your heirs get all the future appreciation of your home.

How much you may receive

The amount of money you receive is dependent on a number of factors, including:

• Your age at the time you apply for the loan
• The type of reverse mortgage you choose
• The value of your home
• Current interest rates

You can use this handy reverse mortgage calculator to find out how much your loan could be.

What you do with the money

Your tax-free proceeds from a reverse mortgage can be used for almost anything, including:

• Daily living expenses
• Home repairs and improvements
• Medical bills and prescriptions
• Credit cards
• Education
• Travel
• Long-term health care
• Retirement and estate planning

Your financial advisor can help you determine the best way to use your funds.

Required HUD Counseling

Before applying for a reverse mortgage, you must first meet with an independent reverse mortgage counselor whose job is to educate you about reverse mortgages, discuss alternative financial options and help you decide which reverse mortgage product is best for you. The session is free and can be done in person or over the phone. Your Reverse Mortgage of Texas representative will be glad to help you arrange this session.

What is Reverse Mortgage?
Who is eligible?
Why Reverse Mortgage?
FAQ