Reverse Mortgage Adviser Icon Reverse Mortgage Adviser
Your Resource for Objective Reverse Mortgage Information
Call Now! 1-800-407-6365
Lenders Click Here
Reverse Mortgage Calculator

Borrower Eligibility
  • All borrowers must be 62 and older
  • Must own property and occupy as primary residence
  • Participate in an information counseling session
  • Property must meet FHA property standards
  • Maintain home with needed repairs, property taxes and insurance
Loan Amount Based On
  • Age of youngest borrower
  • Current interest rate
  • Lesser of appraised value or the FHA insurance limit

Helpful Links
Reverse Mortgage Home
How Reverse Mortgages Work
Step By Step Process
Reverse Mortgage Calculator
Browse Reverse Mortgage Lenders
Reverse Mortgage News
Reverse Mortgage Articles
Frequently Asked Questions
Testimonials and Interviews
Reverse Mortgage Video

BBB Accredited Business

Corporate Links
About Us
Contact Us
Privacy Policy


FHA Legislation Creates Insurance for HUD Reverse Mortgages

Nobody really knows for sure just what piece of FHA legislation created insurance for HECM reverse mortgages, but whoever thought of putting it in the program is a smart one. You can look up the HUD Handbook 4235 to see a very specific provision on this insurance.

Reverse mortgages allows elderly seniors who are at least 62 years old to take out a loan against their home equity. Unlike typical mortgages where the borrower has to make monthly payments, with reverse mortgages, the payment is deferred until the owner dies, moves out, or the house is sold. It is easy to pinpoint the deferred payment as the cause of the great popularity of reverse mortgages.

As with any kind of loan, there are closing costs associated with reverse mortgages. Interest rates, too, are determined by benchmarks – the 10-year T-Bill rates or the LIBOR index. The piece in the legislation puzzle that is making the FHA's reverse mortgages as popular as they are can be described in two words: FHA insurance. This insurance is what saves you in case your home's sales proceeds fall short in repaying the loan (principal plus interest rates and associated costs).

HUD-FHA insurance for reverse mortgages is known as the Mortgage Insurance Premium (MIP). You will find that the MIP is actually a required cost in the closing of reverse mortgages. This is in addition to the loan's origination fee and other closing-related costs. At the start the MIP is equal to 2% of the loan. During the second year and the succeeding years, the MIP falls to 0.5% of the loan balance.

As far as reverse mortgages are concerned, the HUD-FHA legislation requires that the insurance be used for:

  • Paying the reverse mortgage lender in case the sales proceeds or refinancing of the house is not enough to cover the balance of the loan. When this happens, FHA claims the insurance in order to repays the lender.
  • If the company servicing the reverse mortgage files for bankruptcy, the FHA claims the insurance so that the borrower can still access his money.

If you are thinking about taking out a reverse mortgage, you should know that the loan amount that is made available to borrowers is dependent on five factors (again these are indicated in FHA's legislation):

  • The property's appraised value, its conformity to FHA-HUD standards for safety and structural design. Liens against property are also considered.
  • The prevailing interest rate based on the 10-year Treasury Bill or the LIBOR index.
  • The age of the borrower. At all times, the older the borrower, the more money he or she can get.
  • The choice of payment method, whether it is lump sum, line of credit, or monthly payments. Interest fees are at their highest when you opt to be paid in a lump sum, while a credit line maximizes your money. Monthly payments are paid out as long as the borrower lives.
  • The location of the property. The FHA has different maximum loan amounts from county to county.

The five factors all contribute to the Total Annual Lending Cost (TALC) of the loan.

Find A Reverse Mortgage Lender
Find a reputable reverse mortgage lender in your area.
Free Reverse Mortgage Guides
Download up to 5 Reverse Mortgage Guides FREE!
Download up to 5 Reverse Mortgage Guides FREE!
Get Your Reverse Mortgage Kit
Everything you need to know about reverse mortgages.
Get Your Reverse Mortgage Kitr
Reverse Mortgage Video Learning
Determine whether a reverse mortgage is right for you.
Reverse Mortgage Video Learning
Talk To A Reverse Mortgage Expert
Contact an experienced reverse mortgage counselor.
Talk To A Reverse Mortgage Expert
Free Reverse Mortgage Calculator
Find out how much you can borrow, instantly.
Free Reverse Mortgage Calculator

Read Reverse Mortgage Articles
Reverse Mortgage Loans for Senior Citizens
Instant Online Internet Reverse Mortgage Web Calculator
Reverse Mortgage Programs on the Web News
A Reverse Mortgage Price Counselor Counseling Consultant
Reverse Mortgage Loan Costs and Fees Specialist
Seminar: Problems With Reverse Mortgage Products
pros, cons, benefits, disadvantages & pitfalls of reverse mortgages
Age Formula for Reverse Mortgage Rate Calculations
Reversemortgage, Reverse Mortages, Reverse Morgages
Myths, Misconceptions & Limits of the Reverse Mortgage Industry
Application Qualifications to Apply for a Reverse Mortgage
Education Guide, Facts & Rules for the Reverse Mortgage Dummy
What is a Reverse Mortgage, Definition, Guidelines, About & FAQ
Reverse Mortage Loan, Rate and Payment Calculator
Reverse Mortgage Company and Broker Comparison
Affordable Reverse Mortgages from Banks & American Government
Reverse Mortgage Lending, Interest Rates and Line of Credit
Reversed Mortgage Loan Guide for Reversed Mortgages
New Jumbo Affordable Reverse Mortgages Advantages
Statistics Provider Proves That Reverse Mortgage Market Works
Closing Costs of Reverse Mortgage Refinance / Refinancing
Reverse Annuity and Home Equity Conversion Mortgage
FHA Legislation Creates Insurance for HUD Reverse Mortgages
Leads for Reverse Mortgage Lenders, Agents and Brokers
Proprietary / Private Company Reverse Mortgages
HECM Reverse Home Equity Mortgage Loan

Browse Reverse Mortgage Lenders by State
District of Columbia
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Rhode Island
South Carolina
South Dakota
West Virginia