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Product Basics

Reverse Mortgages Can Help Your Senior Customers

CONSUMER
ELIGIBILITY

Key requirements for applying
for a reverse mortgage loan

PRODUCT
FEATURES

A full suite of reverse
mortgage borrowing options

CONSUMER ELIGIBILITY

    To be eligible for a reverse mortgage (HECM loan), some key requirements are:
  • The youngest borrower on title must be at least 62 years of age
  • Borrower must live in the home as their primary residence and have sufficient equity
  • Borrower must be able to pay off the existing mortgage using the loan proceeds
  • Live in a single family, two-to-four unit owner-occupied home, townhouse, approved condominium or manufactured home
  • Must meet financial eligibility criteria as established by HUD Obligations.
    In addition to eligibility, the following conditions must be met:
  • Complete a HUD approved counseling session
  • Maintain your home according to FHA requirements
  • Continue to pay property taxes and homeowners insurance
Close

PRODUCT FEATURES

  • Fixed and variable rate options
  • Home purchase program available (HECM for Purchase)
  • Eliminates monthly mortgage payments
  • Homeowner retains the title to their home
  • Flexible Disbursement options (lump sum, term, tenure, line of credit or a combination of payments)
  • The borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance.
  • Consumer safeguards, including HUD 3rd party counseling and mandatory Mortgage Insurance Premiums (MIP)
Close
BORROWER
PROTECTIONS

Reverse mortgages are
better than ever

LOAN
SCENARIOS

Learn how reverse mortgages work

BORROWER PROTECTIONS

  • Non-recourse loan
  • Borrower remains on title
  • 3rd party independent counseling
  • Specific loan-call features
  • Home value satisfies the lien
Close

LOAN SCENARIOS:

HECM LIBOR/Adjustable Rate
HECM Fixed Rate
HECM for Purchase
Close
CONSUMER
ELIGIBILITY

Key requirements for applying
for a reverse mortgage loan

CONSUMER ELIGIBILITY

    To be eligible for a reverse mortgage (HECM loan), some key requirements are:
  • The youngest borrower on title must be at least 62 years of age
  • Borrower must live in the home as their primary residence and have sufficient equity
  • Borrower must be able to pay off the existing mortgage using the loan proceeds
  • Live in a single family, two-to-four unit owner-occupied home, townhouse, approved condominium or manufactured home
  • Must meet financial eligibility criteria as established by HUD Obligations.
  • Complete a HUD approved counseling session
  • Maintain your home according to FHA requirements
  • Continue to pay property taxes and homeowners insurance
Close
PRODUCT
FEATURES

A full suite of reverse
mortgage borrowing options

PRODUCT FEATURES

  • Fixed and variable rate options
  • Home purchase program available (HECM for Purchase)
  • Eliminates monthly mortgage payments
  • Homeowner retains the title to their home
  • Flexible Disbursement options (Lump Sum, Term, Tenure, Line of Credit or a combination of payments)
  • The borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance.
  • Consumer safeguards, including HUD 3rd party counseling and mandatory Mortgage Insurance Premiums (MIP)
Close
BORROWER
PROTECTIONS

Reverse mortgages are
better than ever

BORROWER PROTECTIONS

  • Non-recourse loan
  • Borrower remains on title
  • 3rd party independent counseling
  • Specific loan-call features
  • Home value satisfies the lien
Close
LOAN
SCENARIOS

Learn how reverse mortgages work

LOAN SCENARIOS:

Pop Up: HECM LIBOR/Adjustable Rate
HECM Fixed Rate
HECM for Purchase
Close

Reverse Mortgage Comparison

  Reverse Mortgage Home Equity Line of Credit Forward Mortgage Sale
Key Benefits No monthly payments; limited income requirements Low upfront cost; quick to get Can extract most equity Obtain more appropriate housing; only option for many
Key Drawbacks Complex product features Income required; At year 10, payments balloon and availability goes away Largest monthly payment; income required Requires stressful relocation; highest transaction costs
Ability to Age in Place
Yes

Yes

Yes

No
Underwriting
Primarily asset-based

Stringent income requirements

Income and asset requirements

Not applicable
Closing Costs
Higher, but often financed. Low-Fee Options

Low

Can be high, usually paid in cash

Highest, but deducted from proceeds
Available Proceeds
40%–60% of home value

Up to 80% of home value

Up to 80% or higher, depending on loan

100%
Payment to Borrower
Line of credit, lump sum or monthly annuity

Line of credit

Lump sum

Lump sum
Loan Repayment
Due when last borrower dies or moves out

Monthly payments with minimum required. Start paydown at year 10

Principal and interest payments over time

Not applicable
Reverse Mortgage
Key Benefits No monthly payments; limited income requirements
Key Drawbacks Complex product features
Ability to Age in Place Yes
Underwriting Primarily asset-based
Closing Costs Higher, but often financed. Low-Fee Options
Available Proceeds 40%–60% of home value
Payment to Borrower Line of credit, lump sum or monthly annuity
Loan Repayment Due when last borrower dies or moves out
Home Equity Line of Credit
Key Benefits Low upfront cost; quick to get
Key Drawbacks Income required; At year 10, payments balloon and availability goes away
Ability to Age in Place Yes
Underwriting Stringent income requirements
Closing Costs Low
Available Proceeds Up to 80% of home value
Payment to Borrower Line of credit
Loan Repayment Monthly payments with minimum required. Start paydown at year 10
Forward Mortgage
Key Benefits Can extract most equity
Key Drawbacks Largest monthly payment; income required
Ability to Age in Place Yes
Underwriting Income and asset requirements
Closing Costs Can be high, usually paid in cash
Available Proceeds Up to 80% or higher, depending on loan
Payment to Borrower Lump sum
Loan Repayment Principal and interest payments over time
Sale
Key Benefits Obtain more appropriate housing; only option for many
Key Drawbacks Requires stressful relocation; highest transaction costs
Ability to Age in Place No
Underwriting Not applicable
Closing Costs Highest, but deducted from proceeds
Available Proceeds 100%
Payment to Borrower Lump sum
Loan Repayment Not applicable

Source: HECM dataset, MetLife studies, AARP Research.

Federal Housing Administration (FHA) mortgage insurance premiums (MIP) will accrue on the reverse mortgage loan balance. The borrower will be charged an initial MIP at closing. The initial MIP will be 2% of the home value not to exceed $13,593. Over the life of the loan, the borrower will be charged an annual MIP that equals .5% of the outstanding mortgage balance.

The borrower’s current mortgage, if any, must be paid off using the proceeds from the reverse mortgage loan. They must still live in the home as a primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.

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