Reverse Mortgage Information
A reverse mortgage is a type of loan available to homeowners aged 62 and older. It let’s you convert a portion of your home’s equity into cash. Unlike a traditional mortgage where you borrow money and pay it back with a monthly payment, a reverse mortgage pays the homeowner – monthly or in a lump sum. The loan is repaid when the homeowner is no longer in the house. A reverse mortgage is not right for every situation and not everyone will qualify for it. You will meet with a reverse mortgage counselor before being approved for one.
What Can I Use The Money For?
- Pay off debt
- Fund medical bills
Interesting and Important Information
- The monthly payments are usually tax-free
- The reverse mortgage shouldn’t affect Medicare or Social Security Benefits
- The reverse mortgage can make you ineligible for need-based governmental programs such as Supplemental Security Income
- The loan typically doesn’t have to be repaid until 6 months after the the last surviving borrower dies, sells the home, or no longer uses the home as a primary residence
- Your home must be owned outright or have significant equity
- You must be 62-year old or older
- The property must meet FHA property standards
- You cannot be delinquent on federal debt (taxes, etc)
- You must own your home as your primary residence
- You must continue to pay insurance, taxes, utilities, and maintenance on the property
- There are closing costs and servicing fees over the course of the loan
- You cannot deduct the interest on your income taxes
- Interest is added onto the balance each month and the amount you owe to pay back increases over the life of the loan
- Heirs will have to pay back the loan in full or 95% of your home’s appraised value (whichever is less)
Reverse Mortgage Counseling
Before you can get a Reverse Mortgage, you have to receive counseling to see if a reverse mortgage is the right financial fit for you. Do you, and your home, have the right qualifications? Will a reverse mortgage benefit you? Will a reverse mortgage fit into your plans for your financial inheritance plans for your heirs? Will the amount available and the accrued interest actually benefit you in the long run?
You can locate Reverse Mortgage Counseling on the HUD Exchange. These are counselors who work nationwide. Click the image to find these counselors.
Your Senior Real Estate Specialist can also provide you information on how a reverse mortgage can effect your property specific to your location. Contact me for more information.