What is a Retirement Mortgage?
A retirement mortgage, otherwise known as a Reverse Mortgage, is a loan solution that allows seniors aged 62 and older to borrow funds secured by a mortgage without having to make monthly mortgage payments. A HECM (Home Equity Conversion Mortgage) loan is a specific retirement mortgage program that is insured by FHA. The vast majority of all retirement mortgages are FHA insured HECM loans.
Funds received from a HECM loan are nontaxable. Guild Mortgage does not provide estate planning or tax advise; please consult a qualified financial planner or tax advisor to understand any potential changes to social security income prior to applying for a retirement mortgage.
A retirement mortgage (or HECM loan) is a mortgage loan and comes with the general risks of obtaining mortgage financing. Loan fees and closing costs will vary depending on borrower situation and loan type. A HECM borrower is required to pay property taxes, insurance, utilities, maintenance, HOA dues and other related expenses for the property after obtaining a retirement mortgage.
A HECM loan debt must be paid before heirs can collect on any potentially remaining equity. The specifics of these situations vary, please speak with your HECM mortgage specialist about your unique situation.
Accomplish the Following with a Retirement Mortgage
- Available in Utah, California, Arizona, Idaho and Wyoming.
- Purchase a primary residence with approximately 50% down or less with no mortgage payments.
- Based on the amount of equity in your home, you may be able to:
- Pay off your existing mortgage with a retirement mortgage to eliminate monthly principal and interest payments.
- Receive a large cash payment at closing with an additional cash payment one year after closing or...
- Receive monthly payments for the rest of your life to supplement your retirement income.
- Receive a line of credit that can be used to cover planned or unplanned expenses such as medical care, home and auto repairs, or any other expense needs.
- Use your home’s equity to supplement your retirement income.
Talk to a Retirement Mortgage Specialist
Please enter your information below and a HECM Loan Officer, a retirement mortgage specialist of Guild Mortgage, will be in touch shortly.
Retirement Mortgage Myths
The first retirement mortgage loan was closed in 1989. Since that time, a lot of myths and false information have arisen about them. Here are some of the most common myths and explanations.
Myth: The Lender or Government will Own Your Home
With a retirement mortgage loan, you, your family and/or your estate continue to retain ownership of your home. The lender's interest is limited to the outstanding loan balance as a lien on the title, just like a typical home loan.
Myth: The Retirement Mortgage Requires Monthly Payments
With a retirement mortgage, there are no monthly payments required to your lender. However, the borrower is responsible for payment of all property taxes, insurance, HOA dues and general upkeep of the home.
Myth: Your Children will be Held Responsible for the Repayment
The retirement mortgage is a non-recourse loan. This means the lender can only derive repayment of the loan from the proceeds of the sale of the property. Even if the value of the home is reduced due to economic, market, or property perils, you or your estate can never owe more than the value of the home. Although your heirs will not be responsible for repayment, they may work with the loan servicer to repay the loan or have an option to refinance the loan.
Myth: You Need a Certain Level of Income, Credit, or Health to Qualify
While a retirement mortgage currently has no income/debt ratios, credit score, or health rules, you will be asked income information for government monitoring and reporting purposes. Also, the lender will run a credit report prior to loan approval to determine the presence of any past due federal debt, which must be brought current at the time of loan closing.
Myth: To Qualify, Your Home Must be Debt Free or "Free and Clear"
You may have a mortgage or other debt liens on your home. The mortgage or debt liens however, must be paid off with the proceeds of the retirement mortgage or prior to closing with an acceptable source of funds. In fact, many borrowers obtain a retirement mortgage for this reason... to be mortgage payment free!
Myth: Retirement Mortgage Lenders Just Want to Sell Your House
Retirement mortgage borrowers may occupy the property as their primary residence for as long as they wish. Borrowers (or their heirs) will be required to repay the loan between six months and a year after the home ceases to be their primary residence.
Myth: If I Take Out a Retirement Mortgage, I Will Have Nothing for My Children
"Retained Equity" is a very important concept to grasp. Realize that your property may continue to appreciate (the whole value of the estate) and you pay interest only on the outstanding principal, interest, and charges accrued through the payoff date. Consult your loan amortization tables for additional details.
Myth: If I Get a Retirement Mortgage, I Cannot Sell My Home
If you decide to sell your home, the retirement mortgage is like any other loan that must be paid off at closing. There are no prepayment penalties for paying off or selling.
Myth: If My Lender Changes, My Loan Terms Can Change
A retirement mortgage is secured by two mortgages or Deeds of Trust depending on the appropriate security instrument filing in your state. One set is for the lender and one set is retained by the Secretary of HUD. Once executed, the terms are defined and cannot be changed by law as long as the mortgages or deeds remain in force.
Myth: My Social Security, Medicare and/or Medicaid Benefits will be Affected
The money from a retirement mortgage is considered borrowed money and is not taxable income by the IRS. Consult with your tax advisor for your specific situation. Social Security and Medicare benefits will not be affected. Medicaid benefits may or may not change due to reverse mortgage cash supplements.
HECM (Reverse / Retirement Mortgage) loans are not a product provided directly by HUD/FHA or the United States Government. Guild Mortgage Company is an approved HUD lender but is not acting on behalf of or at the direction of HUD/ FHA or the Federal Government. References herein to any specific commercial product, process, or service by trade name, trademark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by HUD, FHA, or the United State Government. All programs subject to change without notice. All services rendered by Guild Mortgage Company (NMLS#3274) are to assist in providing mortgage loans. Guild Mortgage Company brokers out this loan. Subject to borrower qualification. The information on this page is intended for informational purposes only.
By filling out the form above, you are giving a HECM Specialist, a Guild Mortgage Company Retirement Mortgage Specialist, permission to call, text and email you to assist you with your HECM / Retirement Mortgage needs. You are also granting permission to Scott Buehler to call, text or email for non-HECM inquiries such as a Conventional, Refinance or Down Payment Assistance. Your information will not be sold.
Contact a HUD approved HECM counseling agency for a detailed review of your HECM risks.
Disclaimer: Loan terms and limits subject to change. This page is meant for educational purposes and is not a commitment to lend. To qualify for a home loan, please speak to Scott Buehler or apply online.