North Carolina Reverse Mortgage Guide: What You Need to Know

Navigating the world of homeownership and financial planning in retirement can be complex. Reverse mortgages emerge as a potential pathway to increase cash flow in retirement.

This financial tool, specifically designed for homeowners aged 62 and older, allows qualified North Carolinians to convert part of the equity in their homes into cash without having to sell their home or take on additional monthly mortgage payments.

However, understanding the nuances and implications of a reverse mortgage is important before making such a significant decision.

The purpose of this guide is to demystify reverse mortgages in North Carolina, providing essential insights into their benefits, potential drawbacks, eligibility criteria, and process so you can make an informed decision.

Whether you’re considering a reverse mortgage to supplement your retirement income, manage unexpected expenses, or simply want to better understand this financial option, this guide is designed to arm you with the knowledge you need to navigate the decision-making process with confidence.

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Understanding Reverse Mortgages in North Carolina

Reverse mortgages are home loans only available to homeowners 62 years of age or older. The most common type of reverse mortgage is the home equity conversion mortgage (HECM), which is backed by the federal government through the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA).

While a reverse mortgage is a home loan, just like a conventional mortgage, it works very differently. When you take out a reverse mortgage loan, the first thing the funds will be used for is to pay off your current mortgage if you still have one.

The remaining funds go directly to the homeowners. They have the option to receive their funds as a line of credit, monthly payments, a lump sum, or a combination of these methods.

Borrowers are not required to make monthly mortgage payments on a reverse mortgage loan. However, homeowners are still required to pay the property taxes, homeowner’s insurance, and home maintenance costs in addition to any HOA fees, if applicable.

A reverse mortgage loan is paid back when the last remaining borrower passes away, the homeowners no longer live in the home as their primary residence, or when the borrowers decide to sell.

A reverse mortgage is a non-recourse loan, which means that borrowers will never owe more on the home than the value of the home or the balance of the loan, whichever is less, according to HUD.

What Can You Use a Reverse Mortgage For?

There are no rules about how reverse mortgage funds need to be used. Common uses include:

Supplementing monthly income
Paying off credit card debt
Paying medical bills
Paying for home renovations and upgrades
Using as an emergency fund
Traveling
Taking pressure off retirement accounts during a market downturn

North Carolina Reverse Mortgage Requirements

Another way that reverse mortgages are different from traditional mortgages is the requirements. In order to qualify for a reverse mortgage, borrowers must meet the following criteria:

At least one homeowner must be at least 62 years old.
The property must be the primary residence of the homeowners.
There needs to be significant equity in the home.
Properties that qualify are single-family homes, multi-family units in which the owners occupy one of the units (such as a duplex or fourplex), and qualifying condos, townhouses, or manufactured homes.
The homeowners need to be up to date on their property taxes and homeowner’s insurance.
The property needs to be in good condition.
Homeowners will need to show they can continue to pay the property taxes and home insurance costs.
Homeowners must also show that they will be able to maintain the home.

If you have any questions about any of the criteria listed above, reach out to a North Carolina Reverse Mortgage specialist today to get all of your questions answered.

How Much Can You Get from a Reverse Mortgage in North Carolina?

The amount of money that you are able to receive from a reverse mortgage comes down to three factors:

The age of the youngest borrower
The current market value of your home
The current interest rates

If you want specific numbers about how much you might be able to receive, you have two options:

Use our reverse mortgage calculator, which will give you an estimate of your potential loan amount.
Talk to one of our reverse mortgage loan officers. This is the best method, as they will be able to give you the most accurate information to help you determine if a reverse mortgage is right for your financial needs. Get the process started by calling the number or filling out the form on this page.

Reverse Mortgage Types Available in North Carolina

We offer three types of reverse mortgages here at Mutual of Omaha Mortgage that are available to qualifying homeowners of the Tar Heel State, including the following:

Home Equity Conversion Mortgage (HECM)

The Home Equity Conversion Mortgage (HECM) is the most common reverse mortgage option. It is backed by the federal government, ensuring its reliability. These mortgages are only accessible to those who are at least 62 years of age, but they offer the flexibility for borrowers to use funds according to their personal preferences.

The amount the homeowners can borrow is influenced by three key factors, notably the age of the borrower, the appraised value of the property, and prevailing interest rates.

Options for disbursement include a single lump sum, monthly payments, a line of credit, or a tailored blend of these methods. As of the year 2024, the maximum lending limit for HECM reverse mortgages is established $1,149,825.

Reverse Mortgage for Purchase

The Reverse Mortgage for Purchase, also recognized as a Home Equity Conversion Mortgage (HECM) for Purchase or H4P, provides senior homeowners with the opportunity to acquire a new residence without the obligation of monthly mortgage payments.

This financial instrument is particularly appealing for older homeowners looking to downsize or rightsize, relocate, or purchase a property that better accommodates their needs in later life.

Prospective buyers are required to contribute a large down payment, which often originates from the proceeds of selling a prior residence or from personal savings, with the remainder of the home’s purchase price being financed through the reverse mortgage proceeds.

This may be a good option for those looking to relocate to North Carolina for retirement.

Jumbo Reverse Mortgage

Known in the industry as proprietary reverse mortgages, jumbo reverse mortgages are private loans offered by lenders that enable homeowners to tap into larger equity amounts than what HECM reverse mortgages permit.

These jumbo programs are particularly designed for properties that surpass the maximum lending cap established by the Federal Housing Administration (FHA), catering to owners of high-value residences.

While Jumbo reverse mortgages provide advantages akin to those of HECMs, it is important to note that since they are private proprietary programs, they do not carry federal insurance.

However, they generally include protections similar to those associated with HECM reverse mortgages. At Mutual of Omaha Mortgage, our jumbo reverse loan is called the HomeSafe Reverse Mortgage.

How to Apply for a Reverse Mortgage in North Carolina

If you are applying for a reverse mortgage in North Carolina with Mutual of Omaha Mortgage, this is what you can expect:

Step 1: Financial Assessment

The initial phase involves a financial review by a reverse mortgage specialist. This assessment will gauge your ability to adhere to the reverse mortgage’s ongoing obligations, which include the payment of property taxes, homeowners insurance, and home maintenance.

Step 2: Mandatory Counseling

Potential reverse mortgage borrowers must undergo a counseling session led by a HUD-approved counselor. This step is a required step of the process, offering a comprehensive understanding of the reverse mortgage’s advantages, associated costs, and the responsibilities it entails. Additionally, the counselor will explore possible alternatives to a reverse mortgage.

Step 3: Application Submission

Following the counseling session, the next action is to submit a formal application. This application will encompass personal details, information about your property, and financial data. This stage also involves selecting the most suitable payment option for your circumstances, such as a lump sum, monthly payments, or a line of credit. The reverse mortgage specialists at Mutual of Omaha Mortgage will walk you through every step of the entire process.

Step 4: Home Appraisal

An appraisal of your home will be conducted to determine its current market value, which is important for determining the amount you can borrow.

Step 5: Underwriting and Approval

The underwriting team reviews your application and all related documents to confirm compliance with all necessary criteria. The underwriter’s role is to either approve or deny the loan application. The underwriter may reach out if additional information or documentation is required.

Step 6: Closing

Upon loan approval, the closing loan documents will need to be signed. This can be done in office or in your home with the help of a mobile notary.

Step 7: Receive Funds

After a three-day waiting period, you will have access to your funds according to the method you chose during the application process.

Common Reverse Mortgage FAQs

Who owns the house with a reverse mortgage?

One of the biggest myths about reverse mortgages is that the bank buys the home from the homeowner, and the lender makes payments to the homeowner in reverse. This is not the case.

A reverse mortgage is a home loan that works similarly to a home equity loan or home equity line of credit (HELOC), in which the homeowners are simply borrowing money from the lender against their home’s equity. The payments being made to the homeowners come from this equity.

What credit score do you need to get a reverse mortgage?

No specific credit score is required to obtain a reverse mortgage. That said, a credit report is typically pulled as part of the reverse mortgage application process as part of the financial assessment to ensure the borrower can still cover the costs of property taxes, insurance, and home maintenance.

Do you have to pay back a reverse mortgage?

Yes. Since a reverse mortgage is a loan, it will need to be paid back. This is done when the homeowners sell the home, the homeowner no longer lives in the home as the principal residence, or when the last remaining borrower passes away.

Why work with Mutual of Omaha Mortgage?

If you are pursuing a reverse mortgage, one of the most important decisions you can make is choosing the right mortgage broker to work with. We at Mutual of Omaha Mortgage know that you have several reverse mortgage lenders to choose from, and we are honored to have you consider us to assist you with this important decision.

While we are built on a company with a more than 100-year legacy that many Americans already know and trust, and we are proud of our reverse mortgage loan officers and the extensive experience and knowledge they bring to this industry, we are most proud of the reputation we’ve built with our customer base.

But you don’t have to take our word for it. Check out the hundreds of five-star reviews from our customers.

Find a California Reverse Mortgage Loan Officer in Your Area

Mutual of Omaha Mortgage is an authorized lender in the state of North Carolina. You can get started by calling 800-578-0283 or filling out this form here.

You can also locate a North Carolina Reverse Mortgage loan officer near you by using our convenient loan officer directory or through one of the links below:

Reverse mortgage borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.

This information is intended to be general and educational in nature and should not be construed as financial advice. Consult your financial advisor before implementing financial strategies for your retirement.

Get Your Free Reverse Mortgage Guide Here!

Download the Guide