Reverse Mortgage
YOU'VE PAID IN, NOW CASH OUT WITH A REVERSE MORTGAGE
Do you ever find yourself short of cash? Would it help if you didn't have to pay a monthly mortgage? Do you want/need to make home repairs or improvements? Would you feel more financially secure if you had access to money you could use if needed? If you answered "YES" to any of these questions, a reverse mortgage may be the solution for you!
A Reverse Mortgage can be a key part of your retirement plan offering you the flexibility to make cash available in a prudent manner so the equity you’ve built up over the years can serve you today and your children tomorrow.
HOW IT WORKS
Let’s assume you're age 62 or older and you’ve decided to get a reverse mortgage. There are three things for you to decide:
How much to borrow.
How to receive your funds (in a lump sum, over time, or a combination of both).
How you’ll pay it off when you no longer occupy the home.
Going forward, you can pay it down, borrow more, or pay it off early.
FIND OUT HOW MUCH CAN YOU BORROW WITH YOUR REVERSE MORTGAGE
Here are the major factors that determine the amount you can borrow:
You must own and occupy your home.
The age of the younger spouse.
Current Interest rates.
The amount you can receive is reduced by the amount you still owe on a mortgage if any.
A reverse mortgage puts you in control of your retirement
HOW TO RECEIVE YOUR REVERSE MORTGAGE FUNDS
You do not have to make any payments on a reverse mortgage. It’s only when you stop occupying your home that the mortgage has to be paid. Once the reverse mortgage is paid off, any untapped equity and subsequent appreciation in your home’s value belongs to you or your heirs. You have several options to receive your reverse mortgage money so you can tailor the arrangement to suit your needs:
Lump-sum payment
Line of credit (you draw down on it as needed)
Tenure (fixed monthly payments for as long as you live in your home)
Combination of these
HOW TO PAY OFF A REVERSE MORTGAGE AFTER YOU NO LONGER NEED IT
When you stop occupying the home the mortgage comes due, you or your heirs have two choices:
Pay off the reverse mortgage and keep the home.
Sell the home and distribute any money left over after it’s sold.
Reverse Mortgage Programs
We offer two reverse mortgages - regular reverse mortgages, also known as The Home Equity Conversion Mortgage (HECM), and jumbo reverse mortgages
SIMILARITIES
Both loan options require no monthly payment. You are responsible for property taxes and home insurance.
Both loan options are due when you sell or leave the home.
You can use proceeds from either reverse mortgage loan any way you want.
DIFFERENCES
The main difference between a Regular Reverse Mortgage (HECM) and a Jumbo Reverse Mortgage is the maximum loan amount. The maximum amount a homeowner can borrow with a Regular Reverse Mortgage is $726,525. With a Jumbo Reverse Mortgage, it allows homeowners to get as much as $4,000,000 based on age and home value.
Jumbo Reverse Mortgages have both adjustable and fixed interest rates. A Jumbo Reverse Mortgage doesn’t require monthly mortgage insurance premiums like a regular reverse mortgage does. So for those whose residence is worth more than a million dollars, you could have an ideal retirement lifestyle with a Jumbo Reverse Mortgage.
Who says these can’t be the best years of your life?
Risks & Advantages
More and more seniors are choosing reverse mortgages to secure their golden years. But before starting the journey, it’s important to assess the risks and advantages.
RISKS
To receive a reverse mortgage the homeowner must occupy their home.
With a reverse mortgage, the borrower must still pay property taxes, insurance, and maintain the home. Charges will be assessed with the loan including an origination fee, closing costs, mortgage insurance, and servicing fees. Failure to pay these amounts may result in the loss of the home.
Having a reverse mortgage means drawing on the equity of your home. The balance of a reverse mortgage loan grows over time and interest is charged on the outstanding balance, which may decrease the value of the estate/inheritance over time.
Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment.
ADVANTAGES
A reverse mortgage can help the homeowner and/or spouse stay in their home.
Can improve monthly cash flow to help pay for retirement needs such as medical expenses, in-home assistance, and life necessities.
A reverse mortgage can offset the burden on the homeowner’s family by helping them live independently.
A reverse mortgage can not get “upside down” so the heirs will never be personally liable for more than the home is sold for.
Heirs inherit the home and keep any remaining equity after the balance of the reverse mortgage is paid off.
Loan proceeds are not taxable.
The interest rate may be lower than traditional mortgages and home equity loans.
A reverse mortgage may help you pay off your current mortgage or loans.
A reverse mortgage can be difficult to understand. However, reverse mortgage counseling is available to help homeowners grasp their loan terms and requirements.
