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Reverse Mortgages
Reverse mortgages enable eligible homeowners to access the money they have built up as equity in their homes. They are primarily designed to strengthen seniors’ personal and financial independence by providing funds without a monthly payment burden during their lifetime in the home. If you are a homeowner age 62 or older, you might be interested in talking with one of our lending specialist about reverse mortgages. These products offer a way to borrow against your home equity to create a regular and tax-free source of income or a significant source of ready cash, all while you continue living in your home. And, you do not repay any part of the loan as long as you occupy your home and do not violate any terms and conditions of the reverse mortgage – unlike regular home loans that you begin paying back as soon as the loan is made.
WHAT YOU NEED TO KNOW ABOUT REVERSE MORTGAGE LOANS
- A reverse mortgage loan is an advance on the equity you have built in your home.
- You and your spouse must be at least 62 or older to qualify for a reverse mortgage. Your home must be your principal residence, be owned free and clear or have only a small balance remaining.
- You still own your home, live in it as long as you want and still leave it to your heirs. If you are married and your spouse dies, you continue to receive payments as long as you live in your home. The balance is due when you sell your home, or in the event of your death.
- There are no income requirements and your credit rating is not important.
- Upfront, out-of-pocket expenses are minimal. A good faith estimate of your closing costs can be provided before you apply for a reverse mortgage. All closing costs are normally financed into the reverse mortgage.
- Your home is being pledged as collateral if a reverse mortgage loan is made to you.
- Credit problems associated with reverse mortgage loans are minimal. Federal tax liens on your property and/or prior issues you may have had with FHA (foreclosures) could affect your ability to secure a reverse mortgage loan.
- If your home requires repairs that exceed fifteen percent (15%) of the property value it could impact your qualification for a reverse mortgage loan.
- The amount of money you receive is determined by the age of the youngest borrower, the appraised value of your home, the current interest rate and the FHA loan limit in your area. In recent years payments ranged from $90 to $3,100 with the average being about $275 per month.
- Your reverse mortgage loan proceeds can be used in any way you wish. If you choose a monthly income plan, the money can be used to supplement your Social Security or retirement income to help meet monthly bills or living expenses. Some homeowners budget the money for larger purchases, such as a vehicle. Others simply enjoy the security of knowing they have a line of credit to draw when needed. It’s your choice.
- You can obtain additional independent information regarding reverse mortgages using the following resources:
- HUD counseling is required prior to completing the reverse mortgage application. Counseling can be accomplished by telephone and usually takes about fifteen to twenty (15 – 20) minutes to complete.
There are many sources of information available concerning Reverse Mortgages.
Following is just a small list of additional websites you might want to visit.
SOURCES TO ASSIST YOU IN MAKING AN INFORMED DECISION
GENERAL INFORMATION:
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- http://www.aarp.org/money/revmort/
- http://www.eldercare.gov OR call (800) 677-1116
- http://www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm
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