Reverse mortgages are designed specifically for senior homeowners, 62 or older.
A typical mortgage requires the homeowner to pay the lender monthly, with a reverse mortgages the opposite is true. The homeowner with equity may receive money monthly, upfront lump sum, a line of equity, or a combination of monthly payments and a line of equity.
Reverse advances are not taxable. Allowing you to retain the title to your home, and you don’t have to make monthly mortgage payments*.
Advantages to reverse mortgages:
- A reverse loan is based on age and the value of your home.
- Supplemental retirement income.
- Lump sum disbursement upfront.
- Paying off of a current mortgage with no monthly mortgage payments required from the homeowner.*
- You may use your proceeds to pay off other debt.
- Tax advantages. (Talk with your tax advisor for details)
- Allows the homeowner to remain in their home.
There are other factors to consider:
- *You retain title to your home, but you are responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses.
- Although some reverse mortgages have fixed rates, most have variable rates that are tied to a financial index: they are likely to change with market conditions.
- Unlike a typical mortgage where the blance reduces every monthy when a payment is received, a reverse mortgage can have a credit line option, wher the unused portion grows montly to allow for a larger available line each year.
- FHA insured reverse mortgages have a "non-recourse" clause, which prevents you or your estate from owing more than the value of your home when the loan is repaid.
- Typical cost are an origination fee, mortgage insurance premium (for federally-insured HECMs), and other closing costs for a reverse mortgage. In most cases a borrower may finance them into the mortgage.
- Interest on a reverse mortgage is not deductible on income tax returns until the loan is paid off in part or whole.
- The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence.
To see if a Reverse Mortgage is right for you, contact us today.
Additonal Resource - Reverse Mortgages: Get the Facts Before Cashing in on Your Home’s Equity