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Reverse Mortgages

 

Improve your life by cashing in on your home’s equity

Whether seeking money to finance a home improvement, pay off a current mortgage, supplement their retirement income, or pay for healthcare expenses, many older Americans are turning to “reverse” mortgages. They allow older homeowners to convert part of the equity in their homes into cash without having to sell their homes or take on additional monthly bills.
In a “regular” mortgage, you make monthly payments to the lender. But in a “reverse” mortgage, you receive money from the lender and generally don’t have to pay it back for as long as you live in your home. Instead, the loan must be repaid when you die, sell your home, or no longer live there as your principal residence. Reverse mortgages can help homeowners who are house-rich but cash-poor stay in their homes and still meet their financial obligations.
To qualify for most reverse mortgages, you must be at least 62 and live in your home. The proceeds of a reverse mortgage (without other features, like an annuity) are generally tax-free, and many reverse mortgages have no income restrictions.


New in 2009:  HECM Reverse Mortgage Loan for Home Purchase

Want to buy a new or existing home that better meets your changing needs or lifestyle?  Maybe you would like to live closer to family, friends, services-or maybe the golf course?  If you are 62+, now you can buy a home without having to deplete your retirement savings and without having to make any monthly mortgage payments.  Use the proceeds from the sale of your home and a HECM Purchase loan for the difference.

 

  • No monthly mortgage payments.  Loan would be due when you move out permanently.
  • Down payment would be between 34% and 47.4% (plus closing costs), depending on age of youngest borrower.
  • Non-recourse:  Never owe more than what the house is worth at time of sale.  If heirs choose not to repay the loan, and the home is foreclosed, they will not be liable for any deficiency.  Any proceeds remaining after satisfying the debt, will be returned to the estate.

*Stipulations include maintaining the home as your primary residence, keeping current on taxes and insurance (Home Owners Association dues if applicable), and making sure the house is properly maintained.



Loan Features
Reverse mortgage loan advances are not taxable, and generally do not affect Social Security or Medicare benefits. You retain the title to your home and do not have to make monthly repayments. 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. In the HECM program, a borrower can live in a nursing home or other medical facility for up to 12 months before the loan becomes due and payable.