I am sure that you would agree that a home is typically an individual’s largest single asset. The question is “Do you have it working for you?” Would it be helpful financially if your mortgage was paid off? Could you use a lump sum of money to pay off credit card debt, do home repair, or travel? Would some extra money each month to pay for everyday living expenses be of help? If you said yes, then a reverse mortgage may be for you.
Think of it as a special type of home equity loan that allows you to convert some of that equity into cash – without having to make monthly payments. Let me say that again, no monthly principal and interest mortgage payments while you own and occupy the home! Loan proceeds may be paid to you in a lump sum, through a line of credit, in monthly advances, and/or a combination of the these options.
And check this out – since this money comes to you as a loan there is no income tax – that’s right, the money you receive is not taxable! Of course, this is not a free loan. These advances of funds and the interest that accrues create a rising debt loan that does not need to be repaid until you are no longer living in the home. Remember, you’ve made a big investment in your home over the years, maybe it’s time your home paid you back! If you can meet the minimum qualifications, then this loan may be an option for you.
What are those basic qualifications? Here they are:
- All borrowers on title must be at least 62 years old. Non Borrowing Spouses under the age of 62 are allowed.
- Own and occupy the home as your primary residence
- Have a qualified property that meets guidelines (Single Family Residence, HUD Approved Condominium Developments, Manufactured Home built after June 15th 1976, or 2-4 units)
- All mortgages and liens against the Property need to be paid off or subordinated (if allowed) at closing which can be from loan proceeds
- Complete an informational session by an approved counseling agency either in person or over the telephone
In addition for your loan underwriting and approval, some standard processes will apply:
- A Financial Assessment will be completed to review your capacity and willingness to pay your obligation.
- A Credit Report is pulled to verify debts and payment history
- Income and asset documentation is collected.
- Past two years Federal Income Tax Returns may be needed.
What are some of the features and benefits to you?
- Ownership or Title Remains in your Name or Trust – Property will go to your Heirs upon death
- No Appreciation Sharing – it is your home, we just have a loan against it
- Money Received Is Not Taxable – you can put 100% of it to use as you please
- No Monthly Principal and Interest Mortgage Payments – We Pay You! Property taxes, Insurance, HOA fees, and Maintenance are your responsibility.
- Monthly Advances can be paid and guaranteed for your Lifetime in the Home
- Line of Credit has a Growth Feature – Giving you More Funds to Borrow over Time
- Loan Is Not Due Until Borrowers No Longer Occupy The Property
- Non Recourse Loan – Can never owe (pay back) more than the home’s market value. Ask for details.
- No Prepayment Penalty
- Government Insured Loan with Adjustable and Fixed Rates
- Does Not Affect Social Security Income Or Medicare Benefits
What are the proceeds from the Reverse Mortgage used for?
- Eliminate Monthly Out of Pocket Principal and Interest Payments on Current Mortgages. Payoff other liens and bills such as car payments and credit cards.
- Create More Cash flow with Monthly Advances
- Set up a Reserve Account with the Line of Credit
- Remodel or make repairs to your home
- Hire in Home Health Care or Pay for Medical Needs
- Travel, buy a car, help grandchildren in college, etc.
- The list goes on and on. Remember, it is your money – how will it best help you and your family?
The main product in the industry today is the FHA Home Equity Conversion Mortgage (HECM) This is the government insured program. This is a rising debt loan against the property due to the fact that the borrowers never have any required monthly principal and interest payments as long as they are living in the home.
You are probably asking how much can you receive from a Reverse Mortgage? Good question and the answer is different for each and every borrower based on a variety of factors. Those factors include the type of reverse mortgage product, ages of the borrowers, value of the property or housing value limit, and the expected interest rate. To find out exactly what you could receive today, just give me a call at 1-888-323-3555 or request my FREE Reverse Mortgage Information Packet .
In most instances, the costs and rates of obtaining a FHA Reverse Mortgage tend to be higher than other types of loans. The charges may include origination fees, mortgage insurance, and other standard third party costs such as the appraisal, title insurance, escrow, etc. It is best to get an illustration showing the anticipated charges as they can vary based on home value, loan balance, purchase or refinance, etc. Rates vary among the type of the FHA HECM program you select but because of the mortgage insurance that is required it offers the lowest rates available compared to private Reverse Mortgages. You can choose between adjustable or fixed rate options.
Well, we are just getting started in the education process and making you a more informed consumer. Take some time now to review our Frequently Asked Questions section. I know you have questions; the good thing is we have the answers. We are only a phone call or email away.