What is a reverse mortgage? Who can qualify for a reverse mortgage? Can the lender take my home away if I outlive the loan? How much money can I get from my home?

What's the difference between a reverse mortgage and a bank home equity loan? What types of homes are eligible? Will I still have an estate that I can leave to my heirs? How do I receive my payments?

Reverse Mortgages

Are you a homeowner, 62 years of age or older, thinking about how to structure your finances for retirement and beyond? Redwood Credit Union is now offering Reverse Mortgages to our Members to meet their growing financial needs. Reverse Mortgage popularity has skyrocketed in the last few years as more and more Americans have become aware of the advantages and benefits. It is important to become familiar with the different programs available and to find the one that best suits your individual needs.

Listed below are a few helpful points about Reverse Mortgages. Due to the unique structure of Reverse Mortgages, it’s important to contact a professionally trained expert to receive the correct information about your personal situation. For more details, please contact one of our knowledgeable and helpful mortgage experts at 1 (800) 609-9009.

What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence.

What's the difference between a reverse mortgage and a bank home equity loan?

With a second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you are still required to pay your real estate taxes and other conventional payments like utilities, but with a Reverse Mortgage, you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

Who can qualify for a reverse mortgage?

To be eligible for a reverse mortgage, a homeowner must be 62 years of age or older; own their home outright, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and they must live in the home. They are further required to receive consumer information from approved counseling sources prior to obtaining the loan.

What types of homes are eligible?

The home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible.

Can the lender take my home away if I outlive the loan?

No! You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home's value.

"Will I still have an estate that I can leave to my heirs?

When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs. None of your other assets will be affected by the Reverse Mortgage loan. This debt will never be passed along to the estate or heirs.

How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is and the older you are, the lower the interest and the more you can borrow.

How do I receive my payments?

You have five options:

• Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term - equal monthly payments for a fixed period of months selected.
• Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower's choosing until the line of credit is exhausted.
• Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
• Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.

If you’re wondering if a Reverse Mortgage is the right financial solution for you or a loved one, our mortgage experts are available to discuss your options at 1 (800) 609-9009

RCU offers Reverse Mortgages through a strategic partnership with California Reverse Mortgage Consultants, Member of the National Reverse Mortgage Lenders Association.