Access to cash

The money borrowed can be used to pay down debt, eliminate other reoccuring payments and enhance the lifestyle of the borrower.

Eliminates mortgage payment

The most attractive benefits of reverse mortgages is that payments are made TO you, as long as you live in your home.

Benefits Unaffected

Government benefit programs that do not test financial resources, such as Social Security and Medicare, are not affected by reverse mortgages.

What is a Reverse Mortgage

Since its inception, the reverse mortgage program has helped thousands of homeowners just like you to safely access the equity in their home to better enjoy your retirement years.

A reverse mortgage is a loan against your home that can help you access a portion of your equity to recieve tax-free cash without having to make monthly loan payments.Unless you choose to voluntarily make payments to your outstanding balance, no payment is required until the last surviving homeowner leaves permanently, passes away, or decides to sell. It is still your home and your responsibility to maintain property taxes and homeowner's insurance.

No, you will still be the sole owner of your home. The bank will not own your home when you take out a reverse mortgage.

Americans are living longer than ever and many are not prepared for the costs that come along with living longer. If you are 62 or older and have sufficient equity in your home, you can convert the equity into funds to use to pay for anything from long-term care costs or debt to home renovations to make aging in place more accessible.

To qualify for a reverse mortgage, you must be 62 or older, have no mortgage balance or have a low mortgage balance that can be paid off with proceeds from the loan. You must live in the home as your primary residence. You must go through a financial assessment that helps determine you are financially stable enough to pay for property charges like taxes.

You must live in either a single-family home or a two to four-unit home, one unit of which you are living in. There are some circumstances where the Department of Housing and Urban Development (HUD) will approve some condominiums and manufactured homes for a reverse mortgage, if they meet FHA requirements.

The amount you will receive from a reverse mortgage loan will depend on the age of the youngest borrower or eligible non-borrowing spouse, current interest rates as well as the appraised value of the home. The amount is capped at the HECM FHA mortgage limit of $636,150 as of January 1, 2017

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Pros

Allows the homeowner to stay in the home.

Can pay off existing mortgages on the home.

No monthly mortgage payments are required, however the homeowner must live in the home as their primary residence, continue to pay required property taxes, homeowners insurance and maintain the home according to Federal Housing Administration requirements.

The homeowner receives payment on flexible terms:

      1. Credit line for emergencies
      2. Monthly payments
      3. Lump sum distribution
      4. Any combination of the above

A reverse mortgage can not get "upside down" so heirs will never be personally liable for more than 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 lower than traditional mortgages and home equity loans.

Cons

The fees on a reverse mortgage are the same as a traditional FHA mortgage but are higher than a conventional mortgage because of the insurance cost. The largest cost are:

      1. FHA mortgage insurance
      2. Origination fee

The loan balance gets larger over time and the value of the estate/inheritance may decrease over time.

A reverse mortgage loan usually does not affect eligibility for entitlement programs, such as Medicare or Social Security benefits such as Medicaid and Supplemental Security Income (SSI) may be affected by a reverse mortgage loan. You should consult a qualified professional to determine if there would be any impact to your government benefits.

The program is not well understood by most individuals. However, the availability of independent reverse mortgage counseling helps.