A reverse mortgage, formally called a Home Equity Conversion Mortgage (HECM), is an FHA-insured loan that lets homeowners 62 and older convert home equity into cash. Unlike a traditional mortgage, you don’t make monthly payments as long as you live in the home as your primary residence. Reverse Mortgage Loans
in South Dakota
Key Benefits of a Reverse mortgage
Eliminate your monthly mortgage payment
Receive funds as a lump sum, a line of credit, monthly payments, or a combination
Non-recourse loan, meaning you or your heirs will never owe more than the home’s value
Stay in your home as long as you meet the loan terms
Can help bridge income needs between retirement and Social Security or Medicare eligibility
Reverse Mortgage Eligibility Requirements
At least one borrower must be 62 or older
The home must be your primary residence
Eligible property types include single-family homes, 2 to 4-unit properties, and FHA-approved condos
No minimum credit score; a financial assessment is required
HUD counseling is required before closing, at no cost to you
Reverse Mortgage Questions, Answered
-
Most homeowners need at least 50 percent equity. The exact amount depends on your age, current interest rates, and home value.
-
Your heirs can sell the home to pay off the loan, keep it by paying 95 percent of the appraised value, or walk away with no debt owed if the balance is more than the home’s value.
-
No minimum credit score is required, but a financial assessment determines whether funds need to be set aside for taxes and insurance.