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Reverse Mortgages

A reverse mortgage is a program designed specifically for homeowners over the age of 62. With a reverse mortgage the homeowner receives cash from the lender, retains title to the property, and makes no mortgage payments. The lender's mortgage on the property is repaid only at the time that the borrower ceases to reside in the home.


A reverse mortgage is a good choice for many older homeowners because it gives them the ability to receive tax-free income without having to make mortgage payments, sell their home or affect their hold on their title. Another benefit is that qualification for reverse mortgages is based almost solely on your home's equity - there are no income or credit requirements. Your current loan (if you have one) will be paid off with your new reverse mortgage, totally eliminating any current mortgage payments and helping to free up your cash flow. However, it is important to note that, because you make no monthly payments, the mortgage amount you owe grows larger over time. As your mortgage increases, the amount of equity you have left after selling your home or paying off the loan generally grows smaller. You are also still responsible for property taxes, insurance and repairs on your home.


Is a reverse mortgage the right choice for you?


 

  • Are you over the age of 62? Any homeowner over the age of 62 can take advantage of a reverse mortgage, as long as the home is his or her primary residence and he or she has sufficient equity in the home.


  • Would you benefit from less stringent qualification requirements? For those who are having difficulty obtaining a conventional mortgage, reverse mortgages are good because neither income nor credit history is considered by lenders in determining who qualifies. Approval and the amount you qualify for is based almost entirely on your age and the equity you have in your home.


  • Do you have minimal assets other than your home? If you are in need of income, but you have minimal assets, a reverse mortgage is something to consider. If you are retired, for example, and need income to supplement Social Security, a pension or a retirement account, then a reverse mortgage might be a good option for you. It is a good source of funds to support a loved one, pay off bills and medical expenses, or just to give you more money and the financial freedom to enjoy your life.


  • Are you planning on passing down your home to heirs? One very important thing to keep in mind when considering a reverse mortgage is that you will be using up part or all of an asset that might otherwise be left to children or other heirs. Since the interest that you incur on the loan is added to the balance of the reverse mortgage against your property, your equity is usually decreasing (unless the value of the home is increasing rapidly). This means there will be less equity available if the property is sold. So before moving forward be sure to familiarize yourself with all aspects of a reverse mortgage.

 
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