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 or enjoying monthly loan proceeds from the years you’ve invested in your home. The Home Equity Conversion Mortgage (commonly called a reverse mortgage) was designed by the Federal Government to provide financial aid for senior homeowners. You enjoy access to part of the equity in your home and the freedom and comfort of the home you’ve known for so many years. It’s your home – you paid for it – now you can put it to work for you.
- 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, but borrowers should seek tax advice on how proceeds may effect 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 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.
Whereas a regular mortgage leaves the homeowner owing monthly payments, a reverse mortgage allows the senior homeowner to receive monthly payments from their home’s equity. A reverse mortgage is a much safer option than a conventional mortgage or home equity line of credit because the government guarantees the senior can live in the home for as long as they like 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. While proceeds from a reverse mortgage are not subject to personal income taxation, borrowers should seek tax advice on how proceeds may affect government needs-based programs such as Medicaid and Medi-Cal.
There is no out-of-pocket cost to the homeowner, and any repairs to the house can be funded into the loan. Upon the death of the last remaining borrower, the home passes to their heirs and they have up to six months or more to either refinance and keep the house 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.
We have helped more than 3,000 Senior Americans in San Diego County achieve greater financial independence with this special program. Demand for reverse mortgages has reached an all-time high. To schedule a free, no-obligation consultation to learn how a reverse mortgage 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.
†Courtesy of Reverse Focus, Inc, ©2016. All rights reserved.