Reverse Mortgages By The Numbers
$625,500 – The maximum amount that can be borrowed with a HECM FHA mortgage (home equity conversion mortgage)
The actual amount that a given borrower will be eligible to borrow will depend on several factors, including the appraised value of the property, the amount of equity you have in that home, the age of the borrower (or of the youngest borrower in the case of co-borrowers), and the interest rate of the loan. To get a good idea of the amount you might be able to borrow use the Reverse Calculator at www.reversemortgagevalue.com.
62 – The minimum age to be eligible for a reverse mortgage loan.
In the case of co-borrowers the youngest borrower must be at least 62 years of age in order to apply for the reverse mortgage.
70,000 – The number of reverse mortgages originated each year.*
While this may seem like a large number of transactions, when compared to the population of eligible consumers it is actually quite small. Only 2-3 percent of eligible homeowners had taken out a reverse mortgage as of June 2012.
73% – The number of reverse mortgage borrowers in 2011 who withdrew all or almost all of the funds available to them immediately, at the closing of the loan.*
While this might make sense in some cases, homeowners should consider the risk of such a decision, particularly if doing so at a younger age. When the home equity resource is depleted seniors may have further financial difficulties later in life. An essential part of the reverse mortgage process is financial planning to help determine how to make the borrower’s remaining assets, along with any income received last and allow them to live comfortably for the remainder of his or her life. In some cases this may involve tough choices when it comes to budgeting, or delaying retirement, but this planning can help avoid hardship down the road.
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1961 – The year the first reverse mortgage was made in the United States.*
This loan was originated by a savings and loan in Maine. This program led to the establishment of the FHA’s home equity conversion mortgage (HECM), which accounts for the vast majority of reverse mortgages originated today.
Five – The number of payment plan options borrowers can select from when choosing how to receive their payments.
These options include: Tenure, Term, Line of Credit, Modified Tenure, and Modified Term
Unlimited – The number of payments a borrower can receive when he or she selects the tenure payment plan.
With this choice the homeowner receives equal monthly payments for the rest of his or her life as long as they remain living in the home as a primary residence, even if the amount paid out exceeds the value of the home. When the mortgage becomes due (when the borrower passes away or moves away from the home) the borrower or any heirs are not responsible for repaying more than the current value of the property.
*Data from the Consumer Financial Protection Bureau Report to Congress on Reverse Mortgages, June 2012.