It’s a home loan that enables you to convert a portion of your home equity into tax-free funds without having to sell your home, give up title, or take on a new monthly payment. 1
Instead of making monthly mortgage payments, your mortgage pays you. That’s the “reverse” part of a reverse mortgage.
Consult a tax advisor
How a reverse differs from a traditional mortgage
With a traditional mortgage or home equity loan -
Homeowners qualify based on their credit history and debt-to-income ratio. They borrow money which requires making monthly payments.
With a reverse mortgage –
Your mortgage makes payments to you and there are no income, employment or credit score qualifying restrictions. 2
Reverse Mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. Family members are also strongly encouraged to participate in these informative sessions.
You have several options to receive your reverse mortgage proceeds, they are available to you in the following distribution options:
Lump Sum — A specific amount is made immediately available (often used to pay off an existing mortgage).
Term — Funds are released in fixed monthly amounts for a set period requested by the customer.
Tenure — Funds are distributed in equal monthly allotments for as long as at least one homeowner continues to occupy the home as a principal residence.
Line Of Credit — Funds remain available for the customer to draw on as needed or in automatic monthly disbursements.
Combination — You can choose any combination of lump sum, monthly or line of credit disbursements. You can even receive an initial lump sum and put the rest in a line of credit. Regardless of how you choose to receive your proceeds, you can adjust your plan as often as you wish to accommodate changing needs.
You do not need to repay the loan as long as the program requirements are met, including:
You or one of the borrowers continue to live in the house
You keep the property taxes and homeowners insurance current
You maintain the property to FHA standards
The balance due can come from home sale proceeds, or from other resources such as, savings, insurance or possibly applying for a new mortgage. There is no requirement that the home be sold, only that the loan be repaid.
Because the home is the only collateral attached to the loan, any remaining home equity, along with your other possessions, belongs to you or your heirs.
Will receiving my reverse mortgage proceeds in monthly payments affect my Social Security or Medicare benefits?
If you opt to receive monthly payments, they will not affect your Social Security or Medicare benefits. However, your eligibility for need-based programs such as Medicaid or state assistance programs may be impacted. We recommend that you consult a tax or legal advisor and your local Area Agency on Aging for advice.
You always retain title to your home during the period of your Reverse Mortgage loan. You can sell your home at anytime and pay off the reverse mortgage with the proceeds.
Well established. Well respected. Wells Fargo.
Wells Fargo Home Mortgage is the nation’s leading retail originator of reverse mortgages.
Wells Fargo & Company is a diversified financial services company with 276,000 team members who provide banking, insurance, investments, mortgage and consumer finance for more than 48 million customers.
Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A., and has a presence in mortgage stores and bank locations serving all 50 states.