How a Reverse Mortgage Works
What is a Reverse Mortgage?
A reverse mortgage is a federally insured financial tool that allows senior homeowners age 62 and older to access a portion of their home equity and convert it into tax-free retirement income. It gives you the financial security and supplemental retirement cash flow to stay at your home and live independently—without having to sell your home, give up the title or make monthly mortgage payments.
It’s called a reverse mortgage because unlike a forward mortgage where you make payments, a reverse mortgage actually pays you. Flexible and safe, you make no reverse mortgage payments and will maintain title for as long as you live in your home. When the loan is due, the amount you or your loved one’s owe will not be more than the appraised value of the home. Any equity that remains in your home remains yours-not the banks
It’s time to spend retirement on your terms……
You’ve worked hard all your life. Now it’s time for all the love and money you’ve invested into your home to start paying you back. With a HECM INSURED government product, you can use the funds as you want and enjoy a lifetime of independence and security at home.
Government Safeguards
The federal government has put in place several safeguards in the reverse mortgage program to protect and shield seniors from predatory lending practices. Chief among them is the mandate that a third-party counseling session must occur with an independent HUD-approved counselor before an application can be processed.
It’s Easy To Find Peace Of Mind
A reverse mortgage will not affect your Social Security or Medicare benefits.
And since the money you receive is not considered income, it is tax-free.
* You don’t need any income to qualify for a reverse mortgage
* You make no monthly payments
* You can receive additional monthly income
* You are fully insured and protected against owing more than the value of your home.
And there are no income, employment or credit score restrictions.
Misconceptions
Established by the Federal Government in the 1950’s, reverse mortgages are still a fairly new family of financial products. Though most seniors are retirees and familiar with reverse mortgages, a great many myths still exist that cloud the important relevant facts. The list below will help you dispel the common misconceptions about reverse mortgages.
Common Reverse Mortgage Misconceptions:
The second you get a reverse mortgage; the bank owns your home…….
False: You will maintain title to your home as long as you live in it. You cannot be forced out of your home as long as both property taxes and insurance is paid and the home is maintained in reasonable living condition. You can even use your reverse mortgage to pay for the expenses.
Reverse Mortgages are very risky…….
False: Reverse mortgages are widely regarded as a safe financial product. The federal government has placed strict regulations and safeguards on reverse mortgages to protect seniors. Additionally, the National Reverse Mortgage Lenders Association (NRMLA) was created to develop and promote best practices in the reverse mortgage industry. Live In Reverse is a proud member of NRMLA.
You also have the power to stop the loan process at anytime once you begin your application.
Your home must be paid off to qualify for a Reverse Mortgage…….
False: As long as there is sufficient equity in your home, you may be eligible for a reverse mortgage, even if you still owe money on your existing mortgage. However, the existing mortgage balance must be paid off at closing.
Benefits of a Reverse Mortgage
A reverse mortgage gives you the ability to enjoy financial security and feel more positive about your future without ever having to move out of your home.
You also have the freedom to use the money you receive however you want – there are no limitations!
* Supplement your retirement income
* Pay off an existing mortgage and eliminate debt
* Pay for medical care, prescription drugs and in-home care
* Cover large or unexpected expenses
* Make your home improvements and repairs
* Modify your home for better accessibility
* Travel to visit family & friends or vacation
* Contribute to your grandchildren’s college education
* Buy that new car you need or want
* Gifts for the children/grandchildren
* Live a more comfortable lifestyle
* Help out your financially struggling children
Is A Reverse Mortgage Right For Me?
It’s important to do your research and discuss your options with family members. In doing so, you may decide a reverse mortgage isn’t quite right for you. Here are some reasons why a reverse mortgage may not fit your needs:
* You don’t intend to stay in your home more than a few years
* You plan on leaving your home to your heirs, and they will not or cannot pay back the loan with other funds or financing
* You’re looking for funds to invest
Alternatives to consider
Mortgage refinancing: Refinancing your existing mortgage may lower your monthly payments. It may allow you to pay off your mortgage faster and receive cash out of the equity in your property.
Home equity loan or line of credit: These products borrow against the value of your home. A loan is distributed and you will receive a lump sum or a line of credit can that be drawn upon as needed.
Personal loan: Personal loans typically have higher interest rates than other types of financing options. They are also are unsecured, meaning no collateral is required.
However, unlike reverse mortgages, the above options have income and credit score requirements. And all three options must be paid back in monthly payments within a specified time period.
Our Reverse Mortgage Advisors are committed to objectively helping you find the right solutions that best fit your needs. To learn more, schedule a free consultation today.
1-877-250-9034
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