Reverse Mortgages

A reverse mortgage is a unique home loan available to seniors age 62 or older who want to turn home equity into cash. Reverse mortgages make it easy for seniors to borrow the cash they need without ever having to make a monthly mortgage payment. There are no restrictions on how the money can be used. Many seniors use the funds from their reverse mortgages for home improvements, urgent medical expenses, in-home care, and even normal day-to-day expenses. Lucey Mortgage Corporation offers reverse mortgages to seniors throughout Charleston, Dorchester and Berkeley Counties.

Introduction to Reverse Mortgages

With a traditional home equity loan, borrowers are required to make monthly payments to their lender. With the reverse mortgage, the lender makes a monthly payment to the borrower, which is how the reverse mortgage gets its name. Only once the borrower no longer occupies the home as their primary residence do they need to repay the loan. Even though you are borrowing money and not making payments to a lender, you remain the owner of your home.

The Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage. This is the Federal Housing Administration’s (FHA) reverse mortgage product and is the only federally insured reverse mortgage option. HECMs make up most of the reverse mortgages in the United States.

Reverse mortgages are often used for extra cash, but they can also be used to purchase new homes. To purchase a home with a reverse mortgage, seniors will need to pay the difference between the reverse mortgage proceeds and the sale price of their old homes, in addition to any closing costs.

Qualifying for a Reverse Mortgage

To qualify for a HECM, borrowers must:

  • Be at least 62 years of age
  • Occupy the home as their primary residence
  • Have a low mortgage balance or own their home outright
  • Not be delinquent on any federal debt
  • Be able to meet financial obligations including property taxes, insurance, Homeowner Association fees, etc.
  • Participate in a reverse mortgage information session given by a counselor approved by the U.S. Department of Housing and Urban Development (HUD).

Each borrower’s property must meet specific standards and flood requirements set forth by the FHA.

Reverse Mortgage Payout Options

A few different payout options are available depending on the borrower’s specific needs. If you choose a fixed-rate reverse mortgage, only a single lump sum payment is available. Those who choose an adjustable-rate mortgage will have additional options including:

  • Line of Credit
  • Term – equal monthly payments for a set number of months
  • Tenure – equal monthly payments as long as one borrower occupies the property
  • Modified Tenure – line of credit and tenure combination
  • Modified Term – line of credit and term combination

Seniors and their families often have many questions and concerns regarding reverse mortgages. At Lucey Mortgage Corporation, we aim to educate seniors throughout Charleston, Dorchester and Berkeley Counties, on all aspects of reverse mortgages. If you have any questions about reverse mortgages in South Carolina, or if you are ready to apply for your reverse mortgage, contact us today!