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 You 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)

Contact me, your Senior Real Estate Specialist for more information.