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Home ownership is probably the biggest investment made by an individual in their lifetime. Therefore, the home not only provides shelter, it also serves as a kind of savings account. As the property value of the home increases or decreases, so does the value of the "account."
Almost three-quarters of all older persons own the home in which they live. Increasing numbers of these older homeowners are obtaining home equity conversion mortgages to help them remain independent in their home and community.
Home equity conversion mortgages, also as known as reverse mortgages, are designed to help house-rich, cash-poor homeowners convert the value of their home into income. They are designed to help the older person without their being forced to move or having to repay a loan using their monthly income. The homeowner does not have to surrender the title to the home, nor do they have to repay the loan as long as they live in the home. When the borrower dies, sells, or moves to another location, the borrower or the estate must repay all of the loan advances plus interest.
- Tenure mortgages provide monthly payments to the homeowners as long as they occupy the home as a principal residence.
- Term mortgages provide monthly payments to the homeowners for a fixed period.
- Line of credit mortgages allow homeowners to draw money at times and in amounts of their own choosing
Home equity conversion mortgages are offered by the private sector through lending institutions such as banks and mortgage companies, and by the public sector through state and local government agencies.
The U.S. Department of Housing and Urban Development (HUD) has developed an insured Home Equity Conversion Mortgage Program (HECM). Those eligible to apply for the loans must be 62 years of age, and they must own and live in their own home. Their income should not exceed 80% of the median income for their area. Private lenders are encouraged to participate in the HUD project.
For more information on this and other senior housing options, visit our Links section under the heading "Housing". You can also contact us for more information or assistance.
Note: Links to web sites produced by organizations other than the Virginia Department for the Aging (VDA) are provided for your convenience. When you select one of these links, you will leave VDA's web site. VDA is not responsible for the content of linked web pages, and does not endorse products or services that may be offered on the linked pages. Also, the privacy policies of these sites may differ from the privacy policy followed by the Department for the Aging. Please report incorrect or outdated links to VDA's Web Designer.
