Reverse Mortgage

Reverse Mortgages

Reverse mortgages (also called home equity conversion loans) enable elderly homeowners to tap into their equity without selling their home. The lender pays you money based on the equity you’ve accrued in your home; you receive a lump sum, a monthly payment or a line of credit. Repayment is not necessary until the borrower sells the property, moves into a retirement community or passes away. When you sell your home or no longer use it as your primary residence, you or your estate must repay the cash you received from the reverse mortgage plus interest and other finance charges to the lender.

The process of getting your reverse mortgage will be a lot like getting any other home loan you’ve had. Only the advantages of a reverse mortgage are even better, because you’ll never make a payment on this loan while you live in the home.

Important facts about reverse mortgages:

• You own your home – not the bank.
• You never make another mortgage payment while you live in the home
• You can refinance or sell whenever you want – with no penalty.
• The money you receive is tax-free
• You can use the money you get any way you wish

Who can get a reverse mortgage?

Any homeowner over the age of 62 can apply for a reverse mortgage. As the borrower, you must occupy the home as your primary residence. Reverse mortgages are based on your home’s equity – there are no income or credit requirements.

How do reverse mortgages work?

Your current loan (if you have one) will be paid off with your new reverse mortgage, totally eliminating any current mortgage payment you have! If you have additional equity, you can access that money to pay off bills or get additional cash – tax-free! If your home is paid off, you can use a reverse mortgage to gain access to the equity that you have worked so hard to build. As the homeowner(s), you can choose from one of four ways to receive the additional cash from your reverse mortgage:

1. As a monthly payment
2. In one lump sum amount
3. As a line of credit
4. Any combination of the above options.

Since reverse mortgages allow you to make no monthly payments, the mortgage amount you owe grows larger over time. As your mortgage increases, the amount of equity you have left after selling or paying off the loan generally grows smaller. The amount owed at the conclusion of a reverse mortgage (when you no longer occupy the home) is either the amount of the home’s value or the amount of the current mortgage – whichever amount is less. Also, your home will continue to appreciate just the same as if you had a regular mortgage, increasing your equity as time progresses.

As a Reverse Mortgage borrower, you will retain your place on the property’s title and continue to own your home, so you will still be responsible for property taxes, insurance and repairs. No repayment is required until you no longer occupy the house.

What could you do if your mortgage payment was eliminated, or if you had additional cash?  Whether you just want to have more money to enjoy your life, help support a loved one or pay off other rising bills and medical expenses, a reverse mortgage can give you immediate access to your money.  Give us a call today to learn more about how a reverse mortgage could help you.

 

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