Find the Best Reverse Mortgage Companies in Boston, MA

How to qualify for a reverse mortgage in Boston

To qualify for a reverse mortgage, Massachusetts residents must be 60 or older with a significant amount of equity in their home. Some lenders may require 50% or more in equity. Also, the home must be considered your primary residence (not a vacation property). Your lender may ask for documentation, like utility bills or vehicle registration cards, to verify your primary residence. Be prepared to meet with a reverse mortgage counselor, as well — it’s a requirement of Massachusetts state law.

In addition, you’ll need proof that you have made on-time payments for both property taxes and homeowner’s insurance premiums. You also can’t have any federal debt in delinquency status (like unpaid income taxes). Individual lenders may have other requirements, so it’s best to reach out to the companies you’re interested in to learn more.

Boston reverse mortgage rates

Mortgage rates have been steadily rising. According to national data from the U.S. Department of Housing and Urban Development, the average interest rate for a traditional fixed-rate HECM was 5.61% in September 2022 compared to 3.38% in October 2021. Average HECM purchase rates have also increased from 3.41% in October 2021 to 5.78% in September 2022.

Typical mortgage rates for Boston are slightly higher than the national average, according to data from Zillow. For that reason, you can expect HECM rates to be higher in Boston, although there are individual factors that affect interest rates as well (i.e., the home’s appraised value, the borrower’s age, etc.). It’s beneficial to contact several lenders for an interest-rate quote before you decide on a reverse mortgage option. In general, a higher interest rate will lower the principal (how much you can borrow) and increase overall loan costs.

Boston reverse mortgage FAQ

How much does a reverse mortgage usually cost? To start, you’ll need to cover the costs of mandatory reverse mortgage counseling, which typically ranges from $125 to $200. You can expect to pay similar closing costs on a reverse mortgage as on other mortgage loan products. Closing costs can include origination fees, third-party service fees (i.e., home appraisal, real estate attorney, etc.) and mortgage insurance premiums.

In addition, there are ongoing costs associated with reverse mortgages, like service fees and interest payments. Before you start a reverse mortgage, you should receive a document called a Good Faith Estimate (GFE) from the lender that details all of the fees and charges. You can use the GFE to compare lender offerings and find the best deal.

Is there a downside to reverse mortgages? As with any loan product, there are several downsides to consider before you start a reverse mortgage. First, your equity decreases, often significantly, when you get a reverse mortgage. Also, unlike other loans, you won’t pay down your balance over time, so interest continues to accrue. The increased loan balance will cut further into the equity you may have remaining.

Another downside to consider is the funds you receive from the reverse mortgage may affect your eligibility for Social Security Income or for Medicare benefits. It’s best to meet with your financial planner about your situation before you consider a reverse mortgage. Inquire, for example, about what happens if you have to move to a nursing home as well as the consequences for benefactors of your estate, especially if any reside in your home.

Do you pay interest monthly on a reverse mortgage? You don’t make monthly payments with a reverse mortgage because you are receiving payouts. The loan is repaid later when the home is sold. However, keep in mind that interest does continue to build up on the remaining loan balance. You could choose to make optional monthly payments if you wish.

Can you sell your house if you have a reverse mortgage? You can sell your home if you have a reverse mortgage. However, you’ll have to pay the remaining loan balance with any proceeds you make from the sale.