Reverse Adjustable Fixed Mortgage Information
- Those who obtain a reverse adjustable fixed mortgage can withdraw funds based on the equity they have in their home. Funds are withdrawn in a fixed amount or as a line of credit. Some borrowers decide to use both methods to withdraw funds.
- Borrowers who wish to apply for a reverse adjustable fixed mortgage must be 62 years of age or older, must not be delinquent on federal debt, must own the property or have a small mortgage balance and must occupy the home as their primary residence. There are no income or credit requirements to obtain the loan and closing costs are usually included in the mortgage. Borrowers must agree to participate in a consumer information program, which is presented by an approved HECM counselor.
- Reverse adjustable fixed mortgages do not require repayment of the loan until the home is sold. Once the home is sold, the lender recovers the principal and interest. The borrower's heirs or the borrower receive the remaining value of the home after it is sold. According to the U.S. Department Of Housing And Development, borrowers never owe more than the value of the home. If the proceeds from the sale of the home are insufficient to pay the loan, the FHA pays the lender the amount of the shortfall.