A Reverse Mortgage is a special type of mortgage loan available to senior homeowners (62 years or older), that allows them to convert the equity accumulated in their primary residence into tax-free income without having to sell the home, give up title to the home, or to take on a new monthly mortgage payment.
These mortgage loans are called Reverse Mortgages because the payment structure is "reversed" in comparison to regular mortgage loans. Instead of making monthly payments to the lender, the lender makes payments to the senior borrower. No payments are due on a reverse mortgage until the borrower(s) cease to occupy the home as a principal residence (when the last remaining spouse passes away, sells the home or permanently moves out). The amount owed can never exceed the value of the home. If the home is sold for less than the amount owed on the loan, the lender cannot collect on the shortage amount. If however, the home is sold and the sales proceeds exceed the amount that is owed, the excess money from the sale goes to the borrower(s)' estate.
The funds from a reverse mortgage can be used for any purpose; paying off existing loans, home repair or renovation, daily living expenses, health care expenses, taking a vacation, paying property taxes, etc.
The maximum loan amount is computed based on 3 factors: (1) the age of the
borrower(s), (2) the property value, and (3) current interest rates. In general, the older the borrower, the higher the value of the home, and the less owed on the home, the more money available to the borrower.
Programs And Features:
There are two reverse mortgage programs available to Seniors through Mahalo Mortgage Corp:
- The FHA Home Equity Conversion Mortgage, referred to as "HECM".
- Generation Mortgage Generation Plus®. This program is ideal for higher valued properties which are outside the FHA HECM lending limits.
- NO income or credit qualification required
- NO loan payments required as long as the borrower remains in the home Loan proceeds are non-taxable (consult with your tax consultant). Existing loans and liens against the property can be paid off using the reverse mortgage proceeds
- Borrower continues to own the home
- All loan closing costs, may be financed as part of the Reverse Mortgage
- Eligible property types include single family homes, approved condominium units and townhouses