Reverse Mortgage Loans

What is a reverse mortgage loan?

A reverse mortgage is a type of loan that can provide funds such as lump sum, line of credit or even a fixed monthly income to homeowners who are 62 years of age or older. In short, homeowners that have significant equity in their home can apply for a reverse mortgage as a method to receive more money. Reverse mortgage loans allow homeowners to convert their equity into cash income. Instead of a typical mortgage, the homeowner is not required to make monthly payments on the loan.

How does a reverse mortgage loan work?

Reverse mortgage loans are based on the value of the homeowners home. There are no payments on the loan and the home acts as the loans collateral. The loan is paid (plus interest!) when the homeowner moves, dies, or no longer lives in the home full time. A reverse mortgage loan cannot exceed the value of the home.

The benefits of a reverse mortgage loan:

Retirees with a fixed monthly income may find reverse mortgages appealing as its a way to have more cash income. Because the borrower is not making payments on the loan, a credit check is not needed like a conventional or FHA refinance loan. Typically, a borrower will need to have at least 50% equity in their home to qualify for the loan. This is based on your home’s current value, not what you paid for it. When it’s time for the loan to be paid, even if the value of the home is now less than the reverse mortgage, the heirs or estate is not liable to make up the difference.

The downside of a reverse mortgage loan:

A reverse mortgage loan can be costly for the borrower. Origination fees, closing costs, high insurance and servicing fees are the bulk of upfront costs. Additionally, the interest rate is typically steep. Even though there is no monthly payment, interest still accrues on the loan and is to be paid when the loan is paid off. Another downside is this type of loan can also make it more difficult to sell the home in the future or add a name to the title of the home. Heirs will not be penalized if the homes value decreases and the loan is now more than what the home is worth, but it does diminish any heirs inheritance.

Requirements for a reverse mortgage loan:

In order to be approved for this type of loan your home must be built on or after June 15th, 1976. The U.S. Department of Urban Development (HUD) requires all prospective reverse mortgage borrowers to complete a HUD-approved counseling session. This typically costs $100-$200 and is a 90-minute session to cover the pros and cons for your particular situation.


Is a reverse mortgage loan right for you? CALL/TEXT Realtor Jenny Wetzel (253) 381-9788 or EMAIL for more information.

More Resources

How to Maintain Your Old Home in Tacoma, WA

How to Maintain Your Old Home in Tacoma, WA

How to Maintain Your Old Home in Tacoma, WA. Systematizing home maintenance can alleviate the pressure and concern of missing important “to do’s”. Completing home maintenance items will sustain and improve the value of your home.

read more
How to Purchase a Home With Your VA Loan

How to Purchase a Home With Your VA Loan

The VA Loan provides our military professionals an incredible opportunity to purchase a home with no down payment and competitive terms. You will learn what you need to qualify for a VA loan, the benefits of using your VA loan vs. an FHA or Conventional loan and myths about the VA loan.

read more
How A 1031 Exchange Can Change Your Life

How A 1031 Exchange Can Change Your Life

1031 exchanges are a tax-deferment strategy used in real estate investing to defer capital gains taxes on the sale of an investment property. This allows investors to use the proceeds to acquire a like-kind replacement property, ultimately helping to increase their overall return on investment. To qualify for a 1031 exchange, investors must follow strict rules and timelines outlined by the IRS.

read more

Get In Touch

Tacoma Realtor - Jenny Wetzel

Jenny Wetzel

Call or Text: 253.381.9788


Fax: 253.381.9788