Reverse Mortgage Loans
Tennessee, Georgia, Alabama

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Reverse mortgages have been increasing in popularity over the last five years. The term reverse mortgage conveys the idea that the equity in a home pays the loan over time. With a traditional mortgage – called a forward mortgage – over time payments are made to pay the loan balance, increasing equity.

With a reverse mortgage the home owner never has to make a payment, as long as they own the home and live in it as a primary residence.

FHA HECM

The FHA reverse mortgage is called the HECM – Home Equity Conversion Mortgage. The HUD website explains that the 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.”

It generally provides the home owner with the highest loan to value. The HECM is restricted by FHA loan limits. These limits were increased to $417,000 with the passage of the Housing and Economic Recovery Act of 2008. This change is effective November 1, 2008.

FNMA Home Keeper

The conventional reverse mortgage is called the Home Keeper Mortgage.

Typically the FHA reverse mortgage gives the home owner a higher loan amount. This is true except when the loan amounts exceed the FHA loan limit.

For both reverse mortgage types the amount that can be borrower is determined by the homeowner age, the current interest rate, and the value of the home. Generally the older the borrower and the lower the interest rate, the more that can be borrowed.

Reverse mortgage payment options

There are several options for taking out the equity.

• 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.

More information is available on the FHA reverse mortgage home page .

You can get an estimate of the amount available with this reverse mortgage basic calculator from the AARP website.

Here is a short FHA public service video.