Reverse Mortgages
Not only is it possible to live a more financially secure life, it’s easier than you might think. Let us help.
What is a reverse mortgage?
- A loan that allows homeowners age 62+ to tap into home equity
- There are no required monthly mortgage payments
- Borrowers continue to maintain home as primary residence
- Borrower is responsible for real estate taxes & insurance
- No restriction on use of proceeds
- Loan is repaid when the last borrower permanently moves out or passes away
Eligibility
- Age 62 or older
- Must own their home
- Live in home as principal residence
- The home must meet U.S. Department of Housing and Urban Development (HUD) minimum property standards
- No income or health qualifications
- May still qualify even if there’s a first or second mortgage
- Reverse mortgage proceeds will first be used to pay off any existing liens- it frees up your income for other needs
How does the program work?
Lender makes funds available as a loan and the borrower receives those funds by choosing:
- Single lump sum of cash
- Monthly income for as long as they live in the home or, if preferred, for a specified time period
- Line of credit they can draw on as needed
- Any combination of these
Closing costs can be rolled into the loan. Homeowners continue to live in and retain the title to the residence.
How much can you get?
The amount you can borrow depends on:
- Age of the borrowers
- The type of reverse mortgage selected
- Current Interest rates
- Appraised value of home
- Federal Housing Administration (FHA) lending limits
Top reasons people choose a reverse mortgage
- Pay monthly bills
- Fix-up the home
- Pay for prescriptions and healthcare
- Retire existing mortgage
- Make a major purchase or needed expenditure
- Pay nursing home or assisted living expenses
- Travel
- Help children or grandchildren
- Have more money to enjoy life
What about government benefits?
- Reverse mortgage funds usually do not affect regular Social Security or Medicare benefits
- Needs-based benefits, such as Medicaid and Supplemental Security Income (SSI), may be affected.
- Proceeds from the reverse mortgage are not taxable
Homeowners are advised to contact their tax or legal professional about their particular situation.
When does the loan become due?
Loan is repaid, including accrued interest on the money taken and accumulated monthly servicing and origination fees, when one of the following occurs:
- All borrowers permanently move out of the home
- The homeowner sells the home
- The homeowner fails to pay taxes or homeowner’s insurance, or to maintain the home
- The last surviving borrower passes away
