Reverse Mortgage Indiana: What You Need to Know

If you're a homeowner in Indiana, you might be curious about reverse mortgages. A reverse mortgage is a type of loan that allows homeowners to borrow money using the equity in their home.

To be eligible for a reverse mortgage in Indiana, you must be at least 62 years old and own your home outright or have a low balance on your mortgage.

You can use the funds from a reverse mortgage to pay off your existing mortgage, cover living expenses, or make home improvements.

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A reverse mortgage is a type of loan that allows homeowners to borrow money using the equity in their home. The most common type of reverse mortgage is a Home Equity Conversion Mortgage (HECM), which is federally backed and regulated by the Federal Housing Administration (FHA) and the U.S. Department of Housing and Urban Development (HUD).

To qualify for a HECM, you must be at least 62 years old and participate in a HUD-approved counseling session. This session will help you understand the program's requirements, repayment options, and tax implications.

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A HECM comes with FHA insurance, which means you'll never owe more than the value of your home, even if your outstanding loan balance is larger. However, you'll need to pay a mortgage insurance premium (MIP), which costs 2% of your loan upfront and 0.5% of your outstanding balance annually.

You can receive your HECM funds in different ways, depending on your financial needs. Here are some options:

The maximum amount you can borrow with a HECM is $1,209,750 for 2025, although the amount you'll qualify for depends on the appraised value of your home, your existing mortgage balance, and other financial details.

There are four different types of reverse mortgages available to homeowners in Indiana.

One of the most common types is the Home Equity Conversion Mortgage (HECM), which can feature fixed or adjustable rates. Your interest rate can fluctuate over time with an adjustable-rate HECM.

For another approach, see: How Does a Hecm for Purchase Work

A fixed-rate HECM gives you a set interest rate for the entire loan term.

If you're looking to purchase a home with a reverse mortgage, you might consider a HECM for purchase.

Proprietary reverse mortgages are another option, but they're offered by private companies rather than the government.

Single-purpose reverse mortgages are loans designated for a specific, lender-approved goal, like paying property taxes or improving your home.

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To be eligible for a reverse mortgage in Indiana, you'll need to meet the basic requirements set by the federal government. You must be at least 62 years old.

To qualify, you must own your home outright or have significant equity in it. This means you can't have a mortgage or other liens on the property that would reduce the equity.

You'll also need to meet minimum credit and property requirements. This ensures that you're financially stable and can afford to live in your home.

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To receive a reverse mortgage, you must not be delinquent on any federal debts. This includes taxes, insurance, and other government-backed loans.

Here are the general eligibility requirements in a summary:

A Home Equity Conversion Mortgage (HECM) is a reverse mortgage loan insured by the Federal Housing Administration (FHA). You must be 62 or older to qualify for a HECM.

With a HECM, you borrow against your home equity, and the lender pays you an advance on a percentage of your home equity. You don't have to make monthly principal or interest payments, but you do have to pay property charges like taxes and insurance.

You can receive your funds in a single lump sum, as a combination of lump sum and other options, or through a line of credit. The maximum amount you can borrow is $1,209,750 for 2025, although the amount you'll qualify for depends on your home's appraised value, existing mortgage balance, and other financial details.

Here's a quick breakdown of the options for receiving your HECM funds:

A loan is specifically designed for homeowners aged 62+ who want to convert a portion of their home's equity into cash.

You can get a Home Equity Conversion Mortgage (HECM), which is the most common type of reverse mortgage and the only one insured by the Federal Housing Administration (FHA).

HECMs can only be obtained through an FHA-approved lender, such as Fairway.

If this caught your attention, see: Mortgage Equity Withdrawal

A Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage that allows homeowners to convert a portion of their home's equity into cash. The lender pays you an advance on a percentage of your home equity, and there are no required monthly principal or interest mortgage payments.

You must pay the property charges, like taxes and insurance, however. The loan typically becomes due and payable when the last surviving borrower permanently moves out of the home or passes away. At loan maturity, the sale of the home will always satisfy the loan.

You can only get a HECM through an FHA-approved lender, and the most common type of reverse mortgage is a HECM, which is federally backed and regulated by the FHA and HUD. To qualify for a HECM, you must be 62 or older and participate in a HUD-approved HECM counseling session.

A HECM is a non-recourse loan, meaning you'll never owe more than your house sells for, even if your outstanding loan balance is larger. However, you must pay a mortgage insurance premium (MIP) with a HECM, which costs 2% of your loan upfront and 0.5% of your outstanding balance annually.

Here are the ways you can receive your funds with a HECM:

The maximum amount you can borrow is $1,209,750 for 2025, though the amount you'll qualify for depends on the appraised value of your home, your existing mortgage balance, and other financial details.

A reverse mortgage in Indiana can be a complex decision, but understanding the pros and cons can help you make an informed choice.

You'll likely hear about the benefits of a reverse mortgage, and for good reason - they can be a game-changer for many seniors. Here are some of the advantages:

However, it's essential to consider the potential drawbacks, which may not be as well-known. Some of the cons include:

It's also worth noting that proprietary reverse mortgages, which are not regulated, may charge higher mortgage interest rates, additional fees, or both, and may lend less relative to the home's value to make up for the lack of mortgage insurance.

Here's a summary of the key points to consider:

Fees associated with reverse mortgages can add up quickly. Some common expenses include a loan origination fee, mortgage insurance premiums, a title insurance and report, and HECM counseling.

You'll also be responsible for interest on the amount you borrow. This can be a significant cost over time.

Most of these fees depend on the lender you choose, so shopping around can help you find the best deal. This is similar to shopping around for a mortgage pre-approval.

You can finance most of the fees associated with a reverse mortgage, except for a fee for government-required reverse mortgage counseling. This counseling is a one-time fee that's required by law.

Here are some of the fees you might encounter with a reverse mortgage:

Keep in mind that you may also face refinancing costs if you choose to refinance your reverse mortgage in the future.

With a reverse mortgage, you can access cash from a portion of your home equity without incurring income tax*.

You can use the funds how you want, which is a significant advantage over other financial options.

You generally won't affect your Social Security and Basic Medicare benefits.

This means you can breathe a little easier knowing that your financial situation won't be negatively impacted.

You can use the funds for anything, such as paying off debt, covering living expenses, or even treating yourself to something special.

Here are some ways you can receive your funds:

*This advertisement does not constitute tax advice. Please consult a tax advisor regarding your specific situation.

A reverse mortgage in Indiana can provide you with a range of loan features and options to consider.

You can convert a portion of your home's equity into cash, fixed monthly advances, or a growing line of credit with a Home Equity Conversion Mortgage (HECM). This means you can access the funds you need to cover living expenses, pay off debts, or fund home improvements.

One of the key benefits of a HECM is that you're not obligated to make a monthly mortgage payment as long as you meet the loan terms, which include living in the home as your primary residence and paying property-related taxes, insurance, and upkeep expenses.

Proprietary reverse mortgages, on the other hand, offer even more flexibility. They can have features like equity-sharing provisions, also called shared-appreciation provisions, which allow you to share the appreciation in your home's value with the lender.

The proceeds of a proprietary reverse mortgage can go toward anything, including paying off your existing mortgage to free up monthly cash flow. This can be a game-changer for homeowners who are struggling to make ends meet.

Here are some key features of proprietary reverse mortgages to consider: