Reverse Mortgages in New Mexico: What Homeowners Need to Know

Overview
A reverse mortgage is a loan that uses a home as collateral and defers payments until a later time, typically when the home sells or the homeowner leaves the home.

It allows a homeowner to convert part of the equity in their home into cash without having to sell their home or pay additional monthly bills.

The most common reverse mortgage is a FHA insured loan program, officially called a Home Equity Conversion Mortgage (HECM). This program is for homeowners aged 62 and older who live in their home as their primary residence.

Monthly mortgage payments are not required; however, the homeowner is responsible for property taxes, homeowner’s insurance, and HOA fees.

There are other proprietary reverse mortgage programs available to homeowners 55 and older. These are typically used for higher valued properties.

Borrowers can receive funds as:

• A growing line of credit
• Monthly payments
• A lump sum
• Or a combination of these
  
  

Reverse mortgages are non-recourse loans, meaning borrowers or heirs never owe more than the home’s value.

Benefits for New Mexico Homeowners

• Pay off existing mortgages
• Improve cash flow
• Eliminate current mortgage payments
• Cover healthcare or home repair costs
• Build financial reserves
• Protect retirement assets
• Age in place comfortably
  
  

Eligibility Requirements
HECM Reverse Mortgage (FHA-Insured):

• Age 62+
• Primary residence
• Sufficient equity
• Ability to pay property taxes, homeowner’s insurance, HOA fees, and maintenance
  
  

Proprietary Reverse Mortgage:

• Age 55+
• Higher-value homes
• Flexible loan limits
  
  

How the Loan Is Repaid

The loan becomes due and payable when the last borrower leaves the home or the property is sold. A house could be foreclosed if property taxes, homeowners’ insurance, or HOA fees are not paid. The heirs may sell or refinance the home to pay off the loan.

Why Work With Davis Mortgage

• Local New Mexico expertise
• Personalized planning
• Clear guidance with no pressure
• Support for family members and advisors
  
  

Disclosures
Davis Mortgage, Ltd. – NMLS #1901080
Spencer Lewallen – Mortgage Loan Originator, NMLS #779949

Reverse Mortgage FAQ

1. What is a reverse mortgage?
A reverse mortgage allows eligible homeowners to convert home equity into usable funds without making monthly mortgage payments. The most common program is the FHA-insured HECM for homeowners 62 and older.

2. Do I keep ownership of my home?
Yes. You remain on title and retain full ownership. The loan does not become due as long as you live in the home and meet all obligations.

3. What are my responsibilities?
You must continue paying property taxes, maintaining homeowners insurance, paying HOA dues if applicable, and keeping the home in good condition.

4. How do I receive the funds?
Options include a growing line of credit, monthly payments, a lump sum, or a combination of these.

5. HECM vs. proprietary reverse mortgage?
HECM: FHA-insured, age 62+, federal limits. Proprietary (jumbo): age 55+, higher-value homes, flexible limits.

6. How much money can I receive?
Your available funds depend on your age, home value, interest rates, and program type.

7. When is the loan repaid?
When the last borrower leaves the home, sells the home, or fails to meet housing obligations.

8. What happens to my heirs?
Heirs may sell, refinance, or pay off the loan. Reverse mortgages are non-recourse—no one owes more than the home’s value.

9. Will it affect Social Security or Medicare?
No. These programs are unaffected. Certain need-based programs may require review.

10. Can I pay the loan off early?
Yes. There are no prepayment penalties.

11. Can I still leave the house to my family?
Yes. Your heirs inherit the home and choose how to settle the loan.

12. Are reverse mortgages safe?
HECMs are FHA-insured, federally regulated, and require independent HUD counseling.

13. How do I get started?
Schedule a consultation with Davis Mortgage for a personalized review of your options.