14 Options to prevent foreclosure
Reverse Mortgage
Use your home's equity to eliminate mortgage payments and stay in the home for life.
For Homeowners Age 62+ Eliminate Your Mortgage Payment and Stay in Your Home
What Is a Reverse Mortgage?
A reverse mortgage is a federally regulated loan program that allows homeowners 62 years or older to convert their home equity into cash or pay off an existing mortgage—without making monthly mortgage payments.
Unlike a traditional mortgage, where you make payments to the lender, a reverse mortgage allows the lender to pay you—or pay off your current mortgage—using the equity you’ve already built up in your home.
Most importantly for homeowners in pre-foreclosure:
A reverse mortgage can be used to stop foreclosure and allow you to stay in your home for the rest of your life—as long as you maintain the property and pay property taxes and insurance.
Who Should Consider a Reverse Mortgage?
- Homeowners aged 62 and older
- Those with at least 45–50% equity in the home
- Seniors on a fixed income (retirement, SSI, pension)
- People who are behind on their mortgage, but don’t want to move or sell
- Those without family financial support or who want independence
- Initial Consultation – You speak with a licensed reverse mortgage specialist who reviews your equity, age, and goals.
- FHA Counseling – Required by law. You’ll complete a short session with a third-party HUD-approved counselor to understand your rights.
- Application and Appraisal – Your home is appraised to determine how much equity is available.
- Loan Approval and Closing – The lender pays off your existing mortgage and, if there’s enough equity, may offer you:
- A lump sum payout
- A monthly check
- A line of credit you can use anytime
- You no longer have a mortgage payment—and you stay in your home as long as you live in it.
Benefits of a Reverse Mortgage
- No more monthly mortgage, tax, or insurance payments
- Stops foreclosure immediately once the loan is approved
- Allows you to stay in your home for life
- May provide cash-out equity to help with living expenses, healthcare, or repairs
- FHA-insured—loan never exceeds home value
- Does not affect Medicare or Social Security benefits
Considerations & Risks
- You must continue paying property taxes and homeowners insurance
- Some homes may require repairs to meet FHA safety standards
- Your heirs will need to pay off the reverse loan when you pass (usually through refinance or sale)
- Reduces the equity your heirs will inherit
- Not ideal if you plan to move or sell in the next few years
What You’ll Need to Apply
- Age 62+ homeowner
- Minimum of 45–50% equity in the property
- FHA-approved property condition (or ability to do repairs)
- Completion of a HUD counseling session
- Government-issued ID and proof of residence
Timeline
- Initial consultation and counseling: 1–2 weeks
- Appraisal and underwriting: 2–3 weeks
- Closing and funding: Usually within 30–45 days total
- Foreclosure stopped once loan is conditionally approved and in process
Real Example
Mrs. Thompson, 73, was in default with $42,000 owed on her home. She had no children and no income besides Social Security. With 60% equity, she qualified for a reverse mortgage that paid off her loan, eliminated her monthly payments, and provided an emergency line of credit. She now lives mortgage-free in her home, with peace of mind.
Frequently Asked Questions
Q: Will I lose ownership of my home?
🅰️ No. You still own your home and remain on title. The reverse mortgage simply becomes a lien, just like a traditional mortgage.
Q: What if I can’t do the repairs the FHA requires?
🅰️ If there’s enough equity, the cost of repairs can often be built into the loan and paid after closing.
Q: What happens when I pass away?
🅰️ Your heirs have the right to pay off the reverse mortgage, refinance the home, or sell it. The lender cannot go after other assets.
Considering a Reverse Mortgage to Stop Foreclosure?
We specialize in helping senior homeowners protect their home and independence. We’ll guide you through:
- Qualification based on your age, home value, and loan balance
- Counseling and document preparation
- Repair assistance if needed
- Preventing foreclosure while your loan is in process