Reverse Mortgages Revisited – Part 1

I’ve spoken with you in the past about reverse mortgages, but I think they are such an important part of retirement planning that it is worthwhile to discuss the subject further. This week we will discuss the specifics of a reverse mortgage. Next time, we will review the pros and cons of reverse mortgages.

First, the most important rule: you may only obtain a reverse mortgage if you, or your spouse, is at least 62 years old. If you aren’t 62, I’m sure you have a family member or friend who is and could benefit from this information. Please share this with them.

You may obtain a reverse mortgage as either a refinance on your current residence (principal residence only), or to purchase a new residence. The maximum loan amount is currently $679,650.00 (the National maximum FHA loan limit-this is an FHA loan). The maximum loan available to you is based on your age and whether it is a refinance or purchase. It varies from 37% to 63% of the appraised value of the home, so it does require a fair amount of equity or down payment.

From here on out, it becomes different from any other real estate loan! First, there is virtually NO QUALIFYING  for a reverse mortgage, Only very minimum income and credit factors that nearly everyone can show are required. However, the most significant factor is that there is NO MONTHLY PAYMENT REQUIRED, and if you have sufficient equity, you can actually RECEIVE FUNDS from the loan.

Imagine the opportunity this gives to improve your or your family member’s retirement options.

Let me give you an example:

Currently: 75 year old owner owns home valued at $1,000,000.00 that they’ve outgrown and are ready to move on. Current mortgage is $590,000.00, with 22 years left. Principal and interest payments are $3,040.00/mth.

  1. They could keep the home that no longer works for them or…
  2. They could sell and buy with reverse mortgage-cash of $441,000.00 They can buy at $636,000.00 put $337,754.00 down, with new reverse mortgage, NO PAYMENTS. They reduce their monthly cost by $3,040.00, and put $103,000.00 in the bank!

We think this may be an important consideration for any retirement plan. Please feel free to call 949-500-6365, email,, or reach us through our website  to discuss this or any other real estate matter.