Reverse Mortgages (HECM)
Homeowners 62+ can access their home equity without monthly mortgage payments. We'll walk you through the pros, cons, and eligibility requirements.
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Reverse Mortgage Requirements in Michigan
A reverse mortgage allows Michigan homeowners age 62 and older to convert a portion of their home equity into cash — without selling the home or making monthly mortgage payments. The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the FHA and regulated by HUD. Reverse mortgages can provide financial flexibility for retirees who are equity-rich but cash-flow constrained.
Age and Equity Requirements
To qualify for a HECM reverse mortgage, the youngest borrower on the title must be at least 62 years old. The home must be your primary residence, and you must have sufficient equity — typically at least 50% equity, though the exact amount depends on your age (older borrowers can access more equity). The home must also meet FHA minimum property standards. There is no income or credit score minimum for a reverse mortgage, though the lender will conduct a financial assessment to ensure you can continue to pay property taxes, homeowner's insurance, and HOA fees.
How Disbursement Works
Reverse mortgage proceeds can be received as a lump sum, a line of credit, monthly payments, or a combination of these options. The line of credit option is particularly powerful because the unused portion grows over time at the same rate as the loan interest — meaning the longer you wait to draw on it, the more you have available. The amount you can borrow is determined by your age, the home's appraised value, and current interest rates.
Impact on Heirs and Estate
A reverse mortgage becomes due when the last borrower permanently leaves the home — through sale, moving to a care facility, or death. At that point, heirs have the option to repay the loan and keep the home, sell the home and use the proceeds to repay the loan (keeping any remaining equity), or allow the lender to sell the home. Because HECM loans are non-recourse, the lender can never collect more than the home's value — heirs are never personally liable for any shortfall.
Frequently Asked Questions
Who qualifies for a reverse mortgage?
The youngest borrower on the title must be at least 62 years old. The home must be your primary residence and you must have sufficient equity (typically 50% or more). There is no income or credit score minimum, but a financial assessment is required to confirm you can pay ongoing property charges.
Do I still own my home with a reverse mortgage?
Yes. You retain title to your home throughout the life of the reverse mortgage. The lender does not own your home — you simply have a loan against it. You must continue to pay property taxes, homeowner's insurance, and HOA fees to keep the loan in good standing.
What happens when I move out or pass away?
The reverse mortgage becomes due when the last borrower permanently leaves the home. Heirs can repay the loan and keep the home, sell the home and keep any remaining equity after repayment, or allow the lender to sell the home. The loan is non-recourse — heirs are never personally liable for any amount exceeding the home's value.
Is a reverse mortgage taxable income?
No. Reverse mortgage proceeds are loan advances, not income, and are not subject to income tax. However, you should consult with a tax advisor regarding any potential impact on government benefits such as Medicaid or Supplemental Security Income.
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