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About Reverse Mortgages

Reverse mortgages, also known as home equity conversion mortgage (HECM), allows homeowners 62 or older to tap into the equity of their home. The equity is available in the form of a line of credit, monthly payment or a lump-sum payment. The actual amount available will depend on the market interest rate, type of loan (HECM Standard, HECM Saver, or other), equity in home, location and age of homeowners.

One of the best benefits of a HECM is the loan does not have to be paid off until the borrower on the loan passes away or decides to sell the home.


  • 62 or Older (Homeowners who are 61 1/2 are able to start the application process but the loan cannot close until the borrower is 62)
  • Borrower must complete a reverse mortgage counseling session
  • Property must be HUD approved (single family, some condos and townhomes, some manufactured homes)
  • Equity in the home

Reverse Mortgage Costs

Many personal finance experts have recommended seniors use reverse mortgage loans as a last resort because of the higher fees and it is a negative amortization loan. The fees are from the higher mortgage insurance requirements. The FHA introduced a new type of reverse mortgage, HECM Saver, that lowers the mortgage insurance premiums by a great deal. The drawback is with a HECM Saver, less equity is available to the homeowner to tap into.

Reverse Mortgage Lenders

Although some of the nation's biggest banks such as Wells Fargo, Bank of America and MetLife Bank exited the reverse mortgage market, there are still a number of lenders available serving the market. Lenders such as Proficio Bank, Security 1, Urban Financial Group and One Reverse Mortgage are among the leaders in the space.