FREQUENTLY ASKED QUESTIONS
A special type of home loan that allows you convert some of the equity in your home into cash. You built up equity in your home by making mortgage payments over many years. The equity can be paid back to you.
You will retain the title and ownership during the life of the loan, and you can sell your home at any time. The loan will not become due as long as you continue to live in the home, maintain your home and pay your property taxes and homeowners insurance.
Reverse Mortgages allow you to tap into the equity in your home without making a monthly mortgage payment. Depending on your age, home value and equity, you may be able to access that equity in the form of cash. This can be delivered to you in one of the following ways:
- Lump sum at closing. Cash to you after the loan closes.
- Receive funds as a monthly payment to you for either a set period of time or for as long as you have the reverse mortgage, depending on your needs.
- Maintain funds as a Line of Credit where you can draw money as you need it, when you need it, in an amount you control. The unused Line of Credit will grow every month increasing the amount of money available to you regardless of your current property value.
- This is due to a “Growth feature” applied to the unused portion of your line of credit. It is not earned interest and is applied independent of the value of your property. The “Growing Line of Credit Feature” creates a wonderful hedge against inflation and property value fluctuations.
Any combination of the above funding disbursements may be used.
You can change your options as frequently as you like. This is truly the mortgage of choice and flexibility!
You will retain the title and ownership during the life of the loan, and you can sell your home at any time. The loan will not become due as long you continue to live in the home as your primary residence for at least 181 days/year, maintain your home, and pay your property taxes and homeowner’s insurance.
Reverse mortgages convert home equity into cash. As long as there is sufficient equity in your home, you may be eligible for a reverse mortgage. In fact, many people use a reverse mortgage to pay off an existing mortgage so they can eliminate having to pay monthly mortgage payments.
We encourage you to talk with your adult children about reverse mortgages. Many baby boomers are faced with trying to plan for their retirement and pay for their children or grandkid’s education. Often, the children of many seniors are happy that their parents have a financial solution available to help them live more independently and financially secure.
Two of the great safeguards for reverse mortgages are that:
- They are structured so that the borrower or his estate can never owe more than the value of the home when it’s time to pay if it off.
- The HECM Reverse Mortgage products are insured by the Federal Housing Administration, an arm of the U.S. Department of Housing and Urban Development (HUD).
Actually there are no restrictions. The cash proceeds from the reverse mortgage can be used for any purpose. It is recommended that the borrower speak to a financial advisor. Many seniors have used reverse mortgages to travel, pay off debts, help their kids, make a luxury purchase or just live more comfortably.
The reverse mortgage is an excellent financial planning tool that has been used by homeowners from all walks of life to enhance their retirement years. Financial advisors are suggesting that having a reverse mortgage line of credit may help their clients avoid selling assets during market fluctuations and thereby extend the life of all their assets.
Increasingly, lenders are seeing interest and growth among the JUMBO REVERSE mortgages geared toward borrowers whose homes exceed the FHA value limit of $625,500. Many seniors with multi-million dollar homes are using reverse mortgages as part of their estate or legacy planning in conjunction with advice from financial advisors.