What Is A Reverse Mortgage?
A simple definition for reverse mortgage is: “A way for you to receive cash from your home, pay off your mortgage, and make NO MONTHLY PAYMENTS – for life or as long as you live in the home.”
Imagine living in your home without a traditional mortgage payment and receiving monthly payments from the equity in your home. The Home Equity Conversion Mortgage (commonly called a reverse mortgage loan) was designed by the Federal Government to provide financial aid for senior homeowners. It gives you to access some of the equity in your home so you can enjoy the freedom and comfort of the home you’ve known for so many years. It’s your home – you paid for it – now put it to work for you.
Reverse Mortgage Facts†
- The loan is subject to foreclosure for failure to pay taxes and insurance, to maintain the property and to comply with loan terms”
- A reverse mortgage is a specialized loan for seniors 62 and older.
- A reverse mortgage allows seniors to access a portion of the equity in their home.
- Borrowers maintain title and ownership of their home*.
- Proceeds from a reverse mortgage are not subject to personal income taxation. However, borrowers should seek tax advice on how proceeds may affect government needs-based programs such as Medicaid and Medi-Cal.
- It is not a government grant, but a loan that is repaid in the future. Repayment occurs when the home is sold or the last borrower dies or permanently leaves their residence.
- A reverse mortgage is eligible only for the borrower’s primary or principle residence.
- The borrower is required to obtain HUD counseling (from an independent HUD-approved third party counselor) prior to incurring any costs associated with the loan.
Reverse mortgage borrowers retain ownership and title to their home*. It’s yours just as it was before, but now you can benefit from the equity that’s been building in your home for years. In addition, HECM reverse mortgage loans give you the peace of mind of a government FHA-insured loan where your home and property are the only assets which secure the loan and insures that payments due at the consumer post-closing will be made if the lender fails to do so.
More On Reverse Mortgages…
Regular mortgages leave you owing monthly payments, whereas reverse mortgages allow you to receive monthly payments. A reverse mortgage loan is a much safer option than a conventional mortgage or home equity line of credit. This is because the government guarantees the senior can live in the home as long as they want, with no obligation to repay the loan.
You can get a reverse mortgage on your primary residence, and no repayment is due until the home is sold, the last borrower passes away or permanently leaves the home*. Borrowers are required to keep the home in usable condition, pay property taxes, and keep homeowner’s insurance coverage to avoid the loan becoming due and payable.
As a protection, all those seeking a reverse mortgage are required to obtain counseling (from an independent HUD-approved third party counselor) prior to incurring any costs associated with the loan. Proceeds from a reverse mortgage are not subject to personal income taxation. However, borrowers should seek tax advice on how proceeds may affect government needs-based programs such as Medicaid and Medi-Cal.
The homeowner has no out-of pocket expense, and any repairs to the house can be funded into the loan. Upon the death of the last borrower, the home passes to their heirs. The heirs have up to six months or more to either refinance or must pay off the reverse mortgage or 95 percent of the then-appraised value or sell and keep all the remaining equity. It is important to repeat that their heirs receive 100% of the remaining equity in the house.
Why Not See Us Today?
The demand for reverse mortgages has reached an all-time high. We have helped more than 3,000 Senior Americans in San Diego County achieve greater financial independence with this special loan. To schedule a complimentary, no-obligation consultation to learn how a reverse mortgage loan can improve your retirement, please contact us.
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance. Credit is subject to age and property qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
* Borrowers should seek professional tax advice regarding reverse mortgage proceeds.
*Borrowers must maintain home as principal residence, pay all taxes, insurance, maintain the home, and comply with all other loan terms. Failure to do so may result in foreclosure.
†Courtesy of Reverse Focus, Inc. ©2016. All rights reserved.