What You Need to Know About Reverse Mortgages
WHAT YOU’LL LEARN IN THIS GUIDE
Find out if using your home equity is the right financial move for you.
Learn how a Reverse Mortgage works and compare it to other options.
Explore built-in protections that make today’s reverse mortgages safer than ever.
See why millions of homeowners at or near retirement use reverse mortgages as part of their financial strategy.
Who Qualifies?
TO QUALIFY, YOU MUST
Be at least 62 years old and 55 in some states (non-borrowing spouses may be younger).
Own and live in the home as your primary residence.
Complete the required HUD-approved counseling session. Can cover property taxes, homeowners’ insurance, and maintenance costs.
Clearing Up Common Misconceptions
REVERSE MORTGAGE MYTHS & FACTS
When you have honest and accurate information, you can make educated decisions. At NAF, we’re committed to making sure you receive that information.
Here are some common misconceptions and the truth behind them.
MYTH
Reverse Mortgages Are Only for Those Facing Financial Difficulty
Truth: Reverse mortgages are a financial tool that can help homeowners manage their retirement budget. They provide additional income and stability when used strategically, reducing financial stress and enhancing long-term security.
MYTH
My Home Must Be Paid Off to Qualify for a Reverse Mortgage Refinance
Truth: Many homeowners use a reverse mortgage refinance to pay off their existing mortgage and eliminate monthly mortgage payments. Borrowers must still cover property taxes, homeowners’ insurance, HOA dues, and any applicable fees.
MYTH
The Bank Takes My House When I Pass Away
Truth: Your heirs have options. They can sell the home to pay off the loan balance and keep any remaining equity. FHA mortgage insurance covers the difference if the home’s sale doesn’t cover the loan balance. Heirs also have the option to purchase the home at 95% of its appraised value.
MYTH
There Are Restrictions on How I Can Use the Funds
Truth: Reverse mortgage proceeds can be used however you choose— whether for healthcare costs, home improvements, paying off debt, or supplementing your retirement income.
*Borrowers must occupy the home as their primary residence and maintain the property in good standing.
Is a Reverse Mortgage Right for Me?
A Reverse Mortgage can be a valuable financial tool, but it’s important to determine if it aligns with your retirement goals. Use this self-assessment to reflect on your financial future and lifestyle aspirations.
ASK YOURSELF
What are my retirement goals? Am I on track to achieve them?
Is my home still meeting my needs? Will it continue to do so?
How long do I plan to stay in my home? Does that align with my financial plans?
Do I want to leave my home for my children? If so, is that what they want?
Could an unexpected expense disrupt my financial security?
Am I still working solely for financial reasons? Is that how I want to spend my time?
Where do I see myself in five years? What do I want my future to look like?
What excites me about life? Am I spending enough time on what truly matters to me?
Are there dreams I still want to pursue? What’s holding me back?
Need Inspiration? The next page explores how a Reverse Mortgage can help you maximize your financial flexibility and secure a comfortable retirement. Your retirement years are valuable. ARE YOU MAKING THE MOST OF THEM?
How a Reverse Mortgage Works
A Reverse Mortgage converts your home equity into usable cash, similar to a home equity line of credit (HELOC). The unique benefit of a Reverse Mortgage is that you don’t need to make monthly mortgage payments. Instead, the loan is repaid when you move out, or the home is sold.
KEY BENEFITS
You don’t make monthly mortgage payments.
You still pay your property taxes, insurance, and other property-related expenses and maintain the home.
You can live in your home for as long as you choose and are able.
The loan balance accrues interest over time, but optional payments can help slow its growth.
Unlock Retirement Security
A Reverse Mortgage allows you to access your home’s equity without monthly mortgage payments, giving you the financial flexibility to stay in your home, cover expenses, and enhance your retirement lifestyle.
FOR AGING IN PLACE
Remodel and Maintain Independence: Modify your home to better fit your needs, ensuring comfort and accessibility for yourself, aging parents, or caregivers.
Cover Essential Expenses: Set aside funds for property taxes, homeowners’ insurance, health insurance, and retirement planning costs, including Medicare Part B and Part D.
FOR FINANCIAL LONGEVITY
Eliminate Monthly Mortgage Payments: Pay off an existing mortgage or other debts, freeing up your budget for what matters most.
Build a Safety Net: Establish a growing line of credit to use as needed for emergencies or financial planning.
Protect Your Assets: Avoid selling investments at inopportune times by using home equity for ongoing expenses.
Generate Income: Use your loan proceeds to invest in rental property or financially assist loved ones.
ACHIEVE YOUR RETIREMENT GOALS
Pursue Your Passions: Engage in volunteer work, charitable giving, or traveling to new destinations.
Enjoy the Open Road: Purchase an RV or vacation home or combine proceeds with a home sale to downsize.
Manage Life Changes: Secure funds to navigate significant life events, such as divorce or changes in living arrangements.
What Makes a Reverse Mortgage Different?
Traditional home loans, such as a 15- or 30-year mortgage or a Home Equity Line of Credit (HELOC), can be helpful in many situations.
However, for homeowners at or near retirement, a Reverse Mortgage offers unique benefits that provide financial flexibility without monthly mortgage payments.
A Reverse Mortgage is designed specifically for homeowners in or near retirement, allowing them to access their home equity while continuing to live in their home. Let’s compare how these options stack up against traditional loans to help you determine what works best for your needs. LET’S COMPARE LOAN OPTIONS
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How the Reverse Mortgage Process Works & Next Steps
A Reverse Mortgage follows a simple, step-by-step process similar to a traditional mortgage, with licensed professionals guiding you.
CONSULT WITH AN EXPERT
Meet with a Reverse Mortgage Advisor and trusted financial professionals to explore your options. They’ll help you understand how an Reverse Mortgage works and whether it fits your financial goals.
COMPLETE HUD-APPROVED COUNSELING
All applicants must attend an independent HUD-approved counseling session to ensure they fully understand the loan. Family members and financial advisors are encouraged to join for additional support.
APPLY & GET APPROVED
Your loan officer will help you complete the application and gather the necessary documents. A home appraisal will be scheduled to determine the value of your property and confirm it meets loan requirements.
PROCESSING & UNDERWRITING
The lender conducts a final review to confirm eligibility. If any repairs are needed, funds may be set aside from the loan proceeds to cover costs before closing.
CLOSING & FUNDING
Once approved, you’ll sign the final documents and close the loan. After a three-day rescission period, the loan will be funded, and you’ll receive your money in a lump sum, monthly payments, or a line of credit, whichever option you choose.
