Is a Reverse Mortgage right for you?

Should you consider a reverse mortgage?

Here are the top 4 reasons our clients decided to go with a Reverse Mortgage:

  1. They still owe money on their traditional mortgage. Paying a mortgage on a fixed income can be challenging. A Reverse Mortgage gives you the flexibility to leverage the equity in your home without requiring monthly payments.
  2. They want to improve their cash flow while preserving their retirement savings. A Reverse Mortgage gives you access to cash without depleting your savings or 401K.
  3. They want to avoid financial shortages down the road. Reverse Mortgages can help you plan for future expenses, such as long term care, without the fear of running out of money.
  4. They want to purchase a new home during retirement. With a Reverse Mortgage, you can purchase a new home while keeping your cash flow intact and adding money to your retirement.

A thorough consultation with our team can help you determine if a Reverse Mortgage will be beneficial to you and your retirement goals. In the meantime, here is a list of lending requirements for your review:

  • Age. At least one of the eligible borrowers must be age 62 or older. If you’re age 62 and your spouse is younger this program may still work for you but requires some investigating into the advantages and disadvantages of having a spouse under age 62.
  • House Value. FHA reverse mortgage loan programs currently recognize values up to $970,800. However, this does not mean you are not eligible if your property value is higher than $970,800. You can still qualify, using the equity portion of your house value up to $970,800. Home values and Reverse Mortgage loan amounts are determined by an appraisal. Note: Depending on your home’s value and your goals, there are other loan programs for high value homes that might be a better fit for you. These products, which have no minimum value requirements, can be beneficial when the home value is above $1,000,000. In addition, some proprietary loans will recognize values up to $10,000,000.
  • Interest Rates, Mortgage Balance, and Home Equity. Qualifications are also based on current interest rates and the outstanding loan balance(s) of your existing mortgage(s). Generally speaking, you need to have about 50% or more equity in your home to use a Reverse Mortgage to pay off your existing mortgage loan.
  • Primary Residence. Keep in mind that a Reverse Mortgage loan can only be financed on your primary residence; it will not work for investment properties or a second home.
  • Property Taxes, Homeowners Insurance, and HOA Fees. Borrowers for a Reverse Mortgage are responsible for on-going property expenses, including annual property taxes, homeowners insurance, and homeowners association (HOA) dues (if applicable). If you have been late on your property taxes or insurance payments in the past 24 months you may still qualify for a reverse mortgage loan, but it may require an impound account for property expenses which is referred to as a Life Expectancy Set Aside (LESA).
  • Type of Home. Most home types qualify for Reverse Mortgages. A borrower can finance a single-family home, FHA-approved condos, town houses, twin houses, duplexes, triplexes and even 4-plexes.
  • Credit Score. Your credit profile is a consideration when financing a Reverse Mortgage loan, but credit score is not the most important factor. In fact, we can finance much lower credit scores than traditional mortgage lenders.

Do Reverse Mortgages Deserve Their Bad Reputation?

Reverse Mortgages have gotten a bad rap, but why?

Prior to regulation, consumers didn’t have the protections they enjoy today. Fortunately, Reverse Mortgage products have changed dramatically over the years to the benefit of the consumer.

From 1961-1987, Reverse Mortgages in the United States were not regulated. Small banks and insurance companies financed reverse mortgage loans and each product was different. Moreover, products of the past did not offer the protections available to today’s consumers.

In 1988, Ronald Reagan signed a bill into law which changed the way Reverse Mortgage products work, providing many protections for today’s consumer that weren’t in place prior to regulation. The first FHA insured reverse mortgage loan was originated in 1989. Since then, HUD (the Federal Government’s Department of Housing and Urban Development) regulates and oversees the Reverse Mortgage industry and the FHA (Federal Housing Administration) insures Reverse Mortgage loans. These programs provide the guarantees and security retirees desire when deciding on a Reverse Mortgage, including maintaining ownership of the home.

Now, you can have peace of mind knowing that you can improve your retirement while also leaving the remaining equity to your heirs. If providing a legacy is on your mind we can help.

Check out our Myths Vs Facts page to learn more about common misconceptions

Watch this video to learn more about the safety of a Reverse Mortgage

Please feel free to contact us anytime with questions.

Utilize the Equity in Your Home for Your Retirement

Let’s face it retirement has changed.

We are living longer in retirement than we ever anticipated, forcing us to stretch our dollar further than we imagined. So why not leverage the single largest asset in your portfolio as a source of retirement income?

When you reach retirement age, your home typically represents 30-80% of your overall wealth, making it an ideal vehicle for funding your retirement. A Reverse Mortgage line of credit is a flexible way to provide additional resources to support your retirement and improve your retirement sustainability.

Watch this video to learn more about discovering the benefits of a Reverse Mortgage line of credit:

Please feel free to contact us anytime with questions.

The truth about Reverse Mortgages: facts vs. fiction

There are many misconceptions about Reverse Mortgages and how they work. If you’ve heard negative stories or myths—and have concerns—you are not alone. Most of our Reverse Mortgage clients started where you are, but have taken time to learn the truth, and the real benefits of this retirement planning option.

We want to help you get past the misconceptions, make informed decisions, and find the retirement certainty you desire.

Common Misconceptions

One of the most common misconceptions about Reverse Mortgages is that the bank gets your home.

This is not true. The way in which you hold title to your property will not change with a reverse mortgage. The title designates ownership to the property, and the borrower—an individual, a couple, or a trust—holds that title. That never changes. As with traditional mortgages, the lender (or bank) is financing your home. The bank does not own your home—you do! The big difference between a Reverse Mortgage and a traditional mortgage is that you have no monthly payment requirement, which allows you to improve your monthly retirement cashflow.

Another common misconception is that you are disinheriting your kids when you get a Reverse Mortgage.

Nothing is further from the truth. Your beneficiaries will still inherit all remaining equity in the property after you have passed. In some cases the equity position when you pass may be even more than the equity you have in your home today, even after not paying the Reverse Mortgage for an extended period of time. Your beneficiaries have the option to sell the home, refinance and keep the home, or settle the outstanding loan with a lump sum payment. If there is no remaining equity in the property, your beneficiaries can walk away with no obligation.

Misconception #3: Some people think that they will have to move if the loan is “all used up.”

You will never have to move if you don’t want to. If you, like most of our clients, want to live out your life in the home you love, you can. Even if you have utilized all of the money available in the Reverse Mortgage, you never have to move. The only requirements as a borrower are to occupy the property as your primary residence and pay the on-going expenses (e.g., property taxes, homeowners insurance, general maintenance and homeowners association dues, if applicable).

Additional Facts

You can never owe more than the value of your home.

You never want your loan amount to increase beyond the value of your house. Although that is unlikely to happen, even in extreme circumstances, if it does occur you are protected. Reverse Mortgage loans are considered non-recourse, meaning that the loan is insured for your protection and you can never owe more than the value of your home. Should your home value ever drop below the outstanding balance of the mortgage loan, the mortgage insurance will cover any shortfall. The insurance protects you (the borrower), your estate, and your beneficiaries. Beneficiaries can never inherit any debt, and the lender can never attach to any other financial assets of the estate. The mortgage insurance is a very important feature and offers borrowers security and protection from any downside in the real estate market.

You can choose to make mortgage payments on your Reverse Mortgage—or not.

A reverse mortgage is flexible and does not require you to make payments. There are reasons to consider making payments—either ongoing or for a certain time period— but every situation is unique. We can help you tailor the structure of your Reverse Mortgage to fit your specific retirement needs.

Check out our FAQ page for other commonly asked questions and answers

Calculate How Much You Qualify For.