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Mike Sloan

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You’ve spent your whole life paying for your home, maybe it’s time it paid you back.

A reverse mortgage could be your optimal retirement strategy.

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Reverse Mortgage Lender

Mike Sloan

Reverse Mortgage Advisor | NMLS #1743494 | 860-962-8600

Is a reverse mortgage right for you?

What is a reverse mortgage?

The reverse mortgage is simply a very flexible loan that gives homeowners the ability to control when and how they convert home equity into cash.

How does a reverse mortgage work?

When you purchased your home, you used your income to repay debt, and this built up equity in your home.  With the reverse mortgage, you are taking this equity out of your home in cash.  The lender sends you cash, and you make no monthly mortgage payments, so the amount you owe (your debt) gets larger as you get more cash and more interest added to your loan balance.  As your debt grows, your equity shrinks. 

What specifically is a reverse mortgage loan?

A reverse mortgage is a non-recourse loan that uses the home's equity as collateral.  Being non-recourse, the home effectively owns the loan so the borrowers' heirs and estate can never owe more than the value of the home.

Should the urgent need arise, how would someone get out of a reverse mortgage?

Reverse mortgages come with a period called "the right of rescission" which is basically a cooling off period.  Borrowers have 3 business days after the closing paperwork has been signed to change their mind with no questions asked and no penalty.  If a borrower wants to get out of the loan after a period of time - see the section below about paying off the loan early.

On average, how much money does someone get from a reverse mortgage?

There is no average amount of money that a borrower can get from a reverse mortgage.  The amount of money or the loan proceeds depends on 3 factors: the age of the youngest borrower, the current value of the home and your interest rate.  As of 2020, the maximum amount that can be paid from a HECM mortgage is $765,600.

Who can qualify for a reverse mortgage?

Homeowners 62 and over with substantial equity in the home may qualify for a reverse mortgage.  Borrowers must be creditworthy and cannot be delinquent on any federal debt.  Borrowers must also successfully complete HUD approved loan counseling.

How much equity do I need to get a reverse mortgage?

The amount of home equity needed to get a reverse mortgage depends on the age of the youngest borrower.  At age 62, the borrower needs roughly 50% equity with this percentage decreasing with age.  However, a borrower can get a reverse mortgage when they don't have the balancing equity to support the loan - just as long as they are able to make up the difference by bringing additional cash to the loan closing. 

Can I pay off my reverse mortgage early? If so, how do I do that?

Provided that the borrower remains current with property taxes, insurance and maintains the home, the reverse mortgage becomes due when the borrower leaves the home for 12 consecutive months, sells the home or dies.  As with forward home loans, there is a loan servicer that manages the loan account.  The borrower has the option to pay off the loan or any portion he/she desires anytime before the loan comes due by working with the loan servicer. 

What happens to my reverse mortgage when I die?

The reverse mortgage comes due 12 months after the last borrower dies.  The heirs or estate pays of the loan which can be paid with the proceeds of the home sale if desired.  The value in excess of the loan belongs to the heirs or estate.  If the loan balance is more than the value of the home the non-recourse feature protects the heirs and/or estate.


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