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Reverse Mortgages What is a Reverse Mortgage? A reverse mortgage allows homeowners who are 62 years or older to convert a portion of the equity in their homes into cash. No repayment is required as long as the borrower owns and lives in the home. There are no income, asset, credit or medical requirements. The homeowner retains title and ownership of the home. Cash advances can be used for any purpose.
What can I use the money for? Every day living expenses Pay off debts or mortgage Property/Home Insurance Medical expenses or in-home care Home repairs Financial Planning
How can I qualify? How much money can I get? The amount you get depends on: How is it paid to me? You can choose how to receive your money. It can be taken: -OR- When do I pay it back? Are Reverse Mortgages Safe? Reverse Mortgages are insured by the U.S. Dept. of HUD and Fannie Mae. Payments to borrowers are guaranteed by the U.S. government. They are only available through HUD approved lenders. Independent HUD counseling is required prior to application. Does not affect Social Security or Medicare benefits.*
*SSI and Medicaid benefits may be affected. Get professional advice. Reverse Mortgage Myths True or False?
| | 1.
| If I have a Reverse Mortgage I can lose my home and all of my remaining equity to the government or the bank.
False: A Reverse Mortgage is only a lien on your home. You still own your home. When you leave the home, the loan balance is repaid in full with the remaining equity passing to you or your heirs.
| 2.
| A Reverse Mortgage will use up all of the equity in my home and there will be nothing left for my heirs.
False: Because you still own your home, and because it will continue to appreciate in value, it is very difficult to use up all of your equity. In fact, in many cases, depending on how much money you use, the amount of equity you have may increase.
| 3.
| Selling my home is better than doing a Reverse Mortgage.
False: If you sell your home, you lose one of the largest and most secure investments you probably have. You would lose 6-10% of your home's equity in sales costs alone. After selling, you would most likely have to pay rent or some other type of monthly payment that would eat away at your savings. For most seniors, moving from their home is physically and emotionally difficult.
| 4.
| I should shop around for the best interest rate on my Reverse Mortgage.
False: The federal government determines the interest rate for HUD Reverse Mortgages. This means that no matter where you go for your Reverse Mortgage, the rate will be exactly the same. You want to work with a lender that is helpful, knowledgeable, professional and that doesn't try to pressure you.
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| I already have a mortgage, so I won't qualify for a Reverse Mortgage.
False: You can use the Reverse Mortgage to pay off the balance of your current mortgage or equity loan. By doing so, you will "free up" the money you used to use for monthly payments on the old loan.
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| I have bad credit, so I won't qualify for a Reverse Mortgage.
False: There are no credit, income asset or health requirements to qualify for a Reverse Mortgage. If you are 62 or older and you own a home - you qualify.
| 7.
| Reverse Mortgages are expensive.
False: Even though a Reverse Mortgage has up-front costs that are folded into the loan, there are NEVER any monthly payments. Compared to other traditional types of home loans that have monthly payments, a Reverse Mortgage is much more economical - especially for seniors.
| 8.
| I have to fix up my house to qualify for a Reverse Mortgage.
False: Your home doesn't have to be in perfect shape, however if there are minor repairs that are required by the lender, they can be done after the closing in most cases.
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| A traditional mortgage loan with monthly payments costs less and is always better than a Reverse Mortgage.
False: Even though a traditional loan with monthly payments might work well in some cases, in general a traditional loan will cost more. In fact, over a 10 year period, a traditional loan of $75,000 will cost you an average of $30,000 more than a Reverse Mortgage. In addition, the traditional loan has the risk of foreclosure, which a Reverse Mortgage does not.
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| We are not eligible for a Reverse Mortgage because my spouse is not 62 years old yet.
False: While it is true that both borrowers must be 62 years or older, if one spouse is not 62, there are still strategies that can be employed that will enable you to obtain a Reverse Mortgage. These strategies can be very safe and practical.
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