There are numerous safeguards in today’s reverse mortgage programs that protect senior homeowners. “Most people don’t realize that the Home Equity Conversion Mortgage (HECM) was designed by Congress and the U. S. Department of Urban Development (HUD) specifically to help seniors enhance their retirement years.  It is a HUD regulated and FHA insured program.” said David Chee, CPA.

A reverse mortgage is a loan that enables senior homeowners 62 or older to borrow against the equity in their home, without having to sell the home, give up title, or take on a new monthly mortgage payment. The money received can be used for any purpose. The loan amount depends on the borrower’s age, current interest rates, and the value of the home. A reverse mortgage does not have to be repaid until the borrower sells or moves out of the home permanently, and the repayment amount cannot exceed the value of the home. After the loan is repaid, any remaining equity is distributed to the borrower or the borrower’s estate.  A borrower’s home does not have to be owned free and
clear to qualify for a reverse mortgage.