REVERSE MORTGAGE LOAN
Provides much needed cash for seniors whose net worth is mostly in the equity of their home.
Homeowners who are 62 or older and have considerable home equity can borrow against the value of their home and receive funds as a lump sum, fixed monthly payment or line of credit. The loan will not be due as long as the primary borrower or the non-borrowing spouse lives in the home. Homeowners keep the title to the home with the ability to refinance, pay off the loan without penalty or sell the home. Reverse mortgage proceeds are not taxable and are considered as loan advance by the IRS, therefore will not affect Social Security, Medicaid, or pension income.
Purpose
- Supplement to the monthly income with tax-free proceeds
- Gives access to cash for sudden expenses
- Eliminates current monthly mortgage payment
- Provides funds for repairs and home improvements or travel
- Allows purchase of a new primary residence, automobile, or RV
- Pays for in-home health care or other medical expenses
Borrowing Limit and disbursement method
- Amount available is bases on the age of the younger borrower, the value of the home, and current interest rates
- Proceeds must be used first to pay off any existing loans or liens against the property
- Remining funds can be disbursed as either guaranteed payments for life, for a specific term, or a lump sum
- Funds can also be left in a growing line of credit for future use
Types of Reverse Mortgages
- Home Equity Conversion Mortgage (HECM) is the most common.
- Jumbo or Proprietary Reverse Mortgage loans for higher home values
- Single Purpose Reverse Mortgage loans for purpose specified by the lender (ex. repairs or property taxes)
Reverse Mortgage Costs:
- Origination fees
- Closing costs (appraisal, title search, surveys, inspections, recording fees, credit fees, Upfront mortgage insurance premium and other fees)
- Initial Mortgage Insurance Premium paid to the FHA
- Ongoing fees such as interest, servicing fees, annual mortgage insurance premium and property charges such as homeowner’s insurance and property taxes, and flood insurance, if applicable.
Qualifying Requirements:
- Must be at least 62 years old
- Own your home free and clear or have at least 50% equity in the home
- No income or credit score requirements
- Continue living in the house
- Stay current on property taxes, homeowner’s insurance and keep the home in good repair
What's on your mind?
We are here to help with our free consultation without an obligation. One of our experienced team members will reach out to you once your information is received.