Use A Reverse Mortgage As A Strategic Financial Tool!
Once you take out a Reverse Mortgage, you stop making monthly mortgage payments and only pay for the insurance, taxes and normal maintenance of the home. Get cash in a lump sum or a line of credit.
No monthly mortgage payments to make
Benefits of A Reverse Mortgage
- You remain the owner of your home
- You can use funds for anything you choose
- Stay living in your home as long as you wish
Reverse Mortgage Myths
- Hard to qualify for
- The bank now owns your home
- Reverse Mortgages are expensive
Easy to Qualify For
- Youngest homeowner must be at least 62+
- If you own your home or have equity
- Your home is your primary residence
A Reverse Mortgage Can be Used for A Purchase or A Refinance!
A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you. However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.
HECM -- The Home Equity Conversion Mortgage (HECM) for Purchase allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.
What is the purpose of the program?
The program was designed to allow seniors to purchase a new principal residence and obtain a reverse mortgage within a single transaction. The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs, i.e., handrails, one level properties, ramps, wider doorways, etc.
HECM offers 4 draw options:
- Monthly income for a fixed term, or life
- Line of credit
- Lump sum
- Any combination of the above 3
Qualifying homeowners can choose to receive tax-free payments from reverse mortgage lenders either on a monthly basis, in a lump sum, or as a line of credit.
- No income or credit checks are required.
- No repayments are required while a borrower lives in the home.
- Social Security and Medicare benefits are not affected.
Reverse mortgage lenders recover the loan amount, plus interest when the home is sold (because owners choose to move, or pass away)
When the loan is paid in full, all equity associated with the property will be distributed to your heirs.
Reverse mortgage borrowers continue to own their homes. Because there are no monthly loan payments due, the amount owed grows over time. That means that the amount and the remaining equity in the home decreases.
Borrowers must continue to pay homeowner’s insurance and property taxes during the loan period. It is also the borrower’s responsibility to keep up with repairs. In fact, if a borrower fails to adhere to any of these obligations, it may become immediate cause for the loan to become due. In which case, it would become payable in full.
You must be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, have the financial resources to pay ongoing property charges including taxes and insurance, and you must live in the home. You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan.
Each borrower listed on the title must apply for the reverse mortgage loan, attend a free HUD counseling session and sign the loan papers. The HUD counseling is either handled in person, or over the telephone.