Reverse Mortgage

reverse mortgage coupleMake the Most of Your Home Equity to Meet Your Needs and Achieve Your Goals

If you’re looking for ways to supplement your retirement income, a Reverse Mortgage loan may be the answer. A Reverse Mortgage allows you to access a portion of the equity in your home to obtain tax-free cash. This can allow you to pay off your home, increase your monthly income, help other family members, complete needed home repairs, and more.

Is a Reverse Mortgage Right For You?

Eligibility Requirements:

  • Must be 62 years of age or over.
  • The purchased home must be your principle residence.
  • The purchased home must meet HUD’s minimum property standards and be either a single-family residence, a residence in 1-to 4-unit dwelling, certain condominiums, or an eligible manufactured home.
  • The down payment must be from qualifying sources.
  • You must complete a HUD-approved counseling session.

Benefits of a Reverse Mortgage:

  • Security- government-insured loan
  • Availability- generally no income or credit score requirements
  • Peace of Mind- eliminates your monthly mortgage loan payments
  • Homeownership- you maintain exclusive title of your home
  • Predictability- repayment obligation is limited to the value of your home, provided you or your heirs decide to sell the home
  • Equity Growth- you or your heirs receive any remaining equity once loan is repaid

The Reverse Mortgage Home Purchase Process:

Purchasing a home with a Reverse Mortgage is very similar to purchasing a home with a conventional mortgage, with two minor exceptions. Rather than determining a down payment based solely on the purchase price, the minimum down payment will be based on a factor of your age, interest rates, and the lesser of the home’s appraised value, purchase price, or FHA-imposed national lending limit. Once an offer is accepted, your Reverse Mortgage lender will work with the seller or seller’s agent to open an escrow with a title or escrow agency. Reverse Mortgage appraisals, inspections, contingencies, documents, and closings are virtually the same as those with a conventional mortgage. Because of the HUD-required independent borrower counseling, some Reverse Mortgage escrow periods may be slightly longer than that of a conventional mortgage- although this isn’t always the case. You can get your money in a lump sum, fixed monthly amounts, a line of credit that you can draw upon as needed, or a combination of these options.

Example:

  • Don and Shirley Sample want to supplement their retirement income.
  • Shirley is the youngest borrower at 67 years of age. The current interest rate is 5%. The home the married couple wants to purchase is valued at $300,000.
  • Purchase price of the home: $300,000
  • Available loan proceeds after loan & closing fees: $184,000
  • Minimum down payment required: $116,000
  • Monthly mortgage payment: $0

With the money from their Reverse Mortgage, the Sample’s were able to remodel their kitchen, pay off several credit cards, take a belated honey-moon, and set up a savings account for emergencies. They are now mortgage payment-free, and enjoying the peace of mind of having money in the bank.

 

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