HomeSafe Second:
A Second Lien Reverse Mortgage That Puts You First!
Many older homeowners turn to reverse mortgages as a way to tap into their home equity—boosting retirement cash flow, covering rising expenses, or simply gaining peace of mind—without the need to sell the home they love. Traditional reverse mortgages typically require paying off your current mortgage first, often using loan proceeds. But what if you want to keep that low-rate mortgage?
That’s where HomeSafe Second comes in.
Key Benefits of HomeSafe Second:
1. Access Your Home Equity Without Refinancing
With HomeSafe Second, you can keep your existing low-rate mortgage while unlocking a portion of your home equity as a lump sum of cash without refinancing or adding a new monthly mortgage payment.*
2. Flexible Repayment Options
Like a traditional mortgage, HomeSafe Second loan must be repaid with interest and fees. However, as long as you meet the loan terms, repayment can be deferred until you no longer live in the home or pass away. This means borrowers have far more repayment flexibility to improve cash flow and maintain retirement assets.
3. Non-Recourse Protection
Once the loan is due and payable, the sale of the home on the open market typically satisfies the loan. If the sale price isn’t enough to cover the balance, neither borrowers nor their heirs are liable to pay the difference (the “non-recourse feature”).
But, if the home sells for more than the remaining loan balance, the borrower or their heirs pocket the difference!
Alternatively, heirs can keep the home by paying off or refinancing the remaining liens.
What Is HomeSafe Second?
- HomeSafe Second is a second-lien mortgage behind a traditional forward mortgage or Home Equity Line of Credit (HELOC) loan.
- HomeSafe Second allows you to unlock home equity without refinancing your first lien or adding a new monthly mortgage payment. You'll still need to cover property taxes, insurance, and existing mortgage payments
- HomeSafe Second is an attractive alternative to HELOC or Home Equity Loan that gives you the flexibility to maintain your current mortgage terms while putting your home’s equity to work in a cash flow friendly way.
Common Uses of HomeSafe Second
- Consolidate High-Interest Debt
- Manage Everyday Expenses
- Cover Medical and Long-Term Care (LTC) Needs
- Upgrade Your Home for Comfort and Safety
- Enhance Your Lifestyle
General Eligibility:
The borrower(s) must:
- Be 55+ (62+ in TX)
- Own a home in an eligible state (AZ, CA, CO, CT, FL, MT, NV, OR, SC, TX, UT, WA)
- Meet minimum credit and income requirements
- Have an existing first mortgage in good standing
- Attend an approved financial counseling session to help you determine if the loan is a good fit
Eligible Properties:
NOTE: Manufactured homes and modular properties do not qualify.
- Single-Family Homes
- Planned Unit Developments (PUDs)
- Condos and Townhomes
- 2-4 Unit Properties
How does HomeSafe Second compare to a HELOC?
| Feature | HomeSafe Second | HELOC |
|---|---|---|
| Interest Rate Type | Fixed | Variable |
| Loan Type | Lump sum | Line of credit |
| Minimum Credit Score | 600-719 (subject to full financial assessment) 720+ (Simplified financial assessment) |
680 |
| Monthly Payments Required | No. But you can make a payment at any time without penalty to preserve equity. | Yes. Interest only for 10 years, then fully amortizing over 20 years. |
| Minimum Age | Yes. 55 for AZ, CA, CO, CT, FL, MT, NV, OR, SC, UT, and WA. 62 for TX. | No |
| Borrower Still Owns Home | Yes | Yes |
| Availability | AZ, CA, CO, CT, FL, MT, NV, OR, SC, TX, UT, WA | All states |
| Repayment Options | Due when the borrower moves, leaves the property, fails to pay taxes or insurance, or violates the terms of the loan. | 30 years. Interest only for 10 years, then fully amortizing over 20 years. |
*This is an educational example of one HELOC. Requirements, payment, and other terms may vary between lenders.
Frequently Asked Questions
How does HomeSafe Second work?
With Typically, the process has five key steps:
- Be a homeowner with a first mortgage in good standing
- Contact Fairway to determine eligibility and explore how a second mortgage can help
- Complete a third-party counseling session to ensure it’s a good fit and receive a home appraisal
- Receive your funds in a lump sum, which can be used for nearly any purpose
- Defer repayment while you live in the home and meet loan obligations, like paying property taxes and insurance
What are the pros and cons of HomeSafe Second?
Pros
- No obligatory monthly mortgage payments, so long the borrower lives in the home and meets the loan requirements, like paying critical property charges
- Funds are generally not considered income and are generally tax free**
- The borrower retains the title for so long as they meet the loan obligations
- Generally doesn’t affect Social Security or Medicare benefits**
Cons
- Unpaid loan balance grows over time with interest
- Eligibility to qualify for needs-based programs may be affected**
- Typically has higher upfront costs compared to traditional mortgages, Home Equity Lines of Credit (HELOCs), and Home Equity Loans (HELs)
- Can only be used if there is a qualifying first lien in place
How is a HomeSafe Second loan repaid?
Typically, when the loan becomes due and payable, the unpaid balance of a HomeSafe Second loan is satisfied by the home’s sale on the open market. If the sale price isn’t enough to cover the balance, neither borrowers nor their heirs are liable to pay the difference. If the home’s sale exceeds the remaining balance, the borrower or their heirs pocket the difference. Heirs can keep the home by paying off or refinancing the remaining liens.
When does HomeSafe Second become due and payable?
With a HomeSafe Second loan, repayment is deferred until the last remaining borrower passes away or permanently leaves the home. It can also become due and payable if the borrower doesn’t fulfill their loan obligations, like failing to pay property taxes in a timely manner.
What first lien types are ineligible for the HomeSafe Second?
No. Certain first lien types are ineligible for HomeSafe Second, such as:
- Interest-only
- Balloon payment due at maturity
- Negatively amortizing
- Private lender
- Rehab loan during the construction/draw period
- Texas 50(a)(6)
- Reverse mortgage, including HECM
Let’s start a conversation.
If you are interested in a HomeSafe Second loan or want more information, contact us today.
Our experienced team will help you understand HomeSafe Second so you can make an informed decision about whether it's the right financial solution for you.
*Borrower must live in the home, maintain it, and pay critical property charges like taxes and insurance.
**This does not constitute tax or financial advice from Fairway. Please consult a tax professional or financial advisor regarding your specific situation.
The HomeSafe reverse mortgage is a proprietary product of Finance of America Reverse LLC and is not affiliated with the Home Equity Conversion Mortgage (HECM) program.