Reverse Mortgage Facts
You’ve Heard the Words…
You’ve heard the words Reverse Mortgage. You’ve heard the negative rumors about them but just aren’t sure what’s true or false. Helping Hands Community Partners is committed to educating older homeowners and their families about the facts.
A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), is a U.S. Housing and Urban Development (HUD) government insured loan program that allows qualifying seniors with at least one spouse 62 years old or older to access the equity in their primary homes.
A unique feature about a reverse mortgage is being able to receive tax-free cash in a lump sum or whenever needed without ever being required to make a monthly mortgage payment so long as the real estate taxes, homeowner’s insurance and other guidelines are met. This gives may increase the opportunity to remain financially independent.
A reverse mortgage is significantly different than a traditional mortgage and requires a government approved third-party counseling session before an application may be processed. This ensures that a senior understands the details of a reverse mortgage and assures, as best as possible, that a senior is not being taken advantage of by a family member or outside person.
There are many pros, cons, and myths circulating about reverse mortgages. We strongly suggest that you contact us to learn the facts about this complex financial product, and to find out if a reverse mortgage is right for you. Helping Hands has the most Certified Reverse Mortgage Professionals (CRMP) in Massachusetts and Rhode Island than any other non-profit mortgage company. We are passionate about making sure senior homeowners are well served.
A short 10-minute phone conversation will allow us to determine if you meet the loan guidelines. Then we typically schedule a no-cost, face-to-face informational meeting in the convenience of your home. Your family and any trusted advisors are always welcomed to join us as well.
During our meeting you’ll learn about:
- Common challenges facing senior homeowners
- How to qualify for a reverse mortgage
- The key benefits of a reverse mortgage
- The different options of receiving tax free cash
- The uses of a reverse mortgage
- The importance paying real estate taxes and property insurance on time, maintaining your home and other loan requirements
- How a reverse mortgage is paid back
- The cost of a reverse mortgage expensive
- What options are available other than a reverse mortgage
- How long does it takes to process a reverse mortgage application
A Reverse Mortgage is not for everyone. But if you have equity in your home and could use extra money for now or the future, you may benefit from this increasingly popular program. Thousands of people age 62 and older have benefitted tremendously by having cash available for addressing their needs or desires through a HUD insured reverse mortgage. But make sure you receive the facts for your particular situation.
We are available to answer your questions and discuss the merits of reverse mortgage with you. There is absolutely no obligation.
A reverse mortgage is a way to obtain cash from the equity in your home without being required to make a monthly principal and interest payment. A reverse mortgage can allow you to convert the equity in your home into tax-free cash flow or future access to funds. You are always responsible for paying your real estate taxes, property insurance, maintenance of your home, and other loan guidelines.
A reverse mortgage (also known as a “home equity conversion mortgage”) is a HUD-insured loan that gives you an option of getting the money you have invested in your home, without forcing you to leave your home or take on another loan payment. In fact, a reverse mortgage also eliminates any monthly principal and interest mortgage payment you are making now. Here’s how it works…
A reverse mortgage is a loan against your home. But instead of cash flowing from you to the lender, it flows the other way – from the lender to you. You can take out your money four ways:
- You can receive a lump sum at closing
- You can receive cash in monthly advances that are guaranteed for as long as you live in the home and follow other lending requirements
- You can establish a line of credit and draw on your money when you need it
- Or, any combination of the above
No monthly payments are due on a reverse mortgage while it is outstanding. You don’t have to pay the money back until you and your spouse dies, sell your home, or permanently moves out of your home. You are required to maintain your home and remain current on all property charges such as real estate taxes and hazard insurance.
Since a reverse mortgage is a “non-recourse” loan, you can never owe more than what your home is worth at the time the loan is repaid. If the home is sold and sales proceeds exceed the amount owed on the reverse mortgage, the extra money goes to you or your estate.
Here is the key to a reverse mortgage: you remain the owner of your home. You do not give control or share in the equity with the lender or government. Subject to lending guidelines, you can live in your home as long as you want and not have to pay back the loan until you decide to sell, or until you and your spouse have passed on.
What can you do with the remaining cash you receive from your reverse mortgage Anything you want! Fix up your home. Build an addition. Pay off other debts. Take a vacation. Even buy a vacation home! Invest the money. Set up a trust fund for your heirs. There is no limit to what you can do. And all of it is tax-free. There is no tax due on any of the money you receive from your reverse mortgage because it is debt.
Like many traditional conventional mortgages, there are origination fees and closing costs for most reverse mortgages. Fortunately, these fees can be built into the reverse mortgage loan. The typical out-of-pocket fees are the mandatory non-profit counseling session and appraisal fee.
Loan costs can vary by a lot from one type of reverse mortgage to another. The federal Truth-in-Lending law requires lenders to disclose a “Total Annual Loan Cost” for Reverse Mortgage loans. We will make sure to explain the costs in detail and answer all your questions.
Most real estate experts agree that interest rates will rise which may have an impact on home values not increasing significantly in the coming years, and may decline in value. If home values decrease, then the amount of available reverse mortgage proceeds would also decrease.
The actual dollar amount available to you through a reverse mortgage depends on the type of reverse mortgage you select, along with current interest rates and closing costs on home loans in your area. In addition, the amount varies with your home’s value, your age, and balance on any mortgages that you currently hold.
Although the concept of a reverse mortgage is fairly simple and there are many safeguards built into the process, it is still important that you investigate your options thoroughly. In fact, the U.S. Housing and Urban Development (HUD) requires that eligible homeowners attend a mandatory third party non-profit counseling session before proceeding with a reverse mortgage.
A reverse mortgage can be an excellent way to take advantage of the equity you have built up in your home. It is important for you to get all the facts in order to make an informative decision about what is best for you.
Interested in learning more about a reverse mortgage in Massachusetts or Rhode Island? Please contact us for a free no obligation discussion about the pros and cons of reverse mortgages.
A reverse mortgage can be an excellent financial tool. But reverse mortgages are not the right decision for everyone. You need a professional to help look at your overall financial situation and decide if the money you’ll receive from a reverse mortgage will achieve your financial and housing plans. Helping Hands Community Partners can help you evaluate the “big picture” and work with you to determine if a reverse mortgage is the best financial solution for your situation.
The US Housing and Urban Development (HUD) requires all reverse mortgage borrowers to undergo independent non-profit counseling prior to processing their loan application. This provides an opportunity for you to discuss your financial situation with a qualified, objective counselor.
Are you working with the right reverse mortgage company? All companies must follow the strict federal and state reverse mortgage regulations. But not all lenders or brokers understand the intricacies of the pros and cons of obtaining a reverse mortgage. Or they may not have the experience of customizing the reverse mortgage features to optimize your current and future housing goals. Be sure you work with a trusted, experienced reverse mortgage company. Helping Hands has available senior reverse mortgage specialists who have achieved the arduous Certified Reverse Mortgage Professional (CRMP) designation from the National Reverse Mortgage Lenders Association. They will be happy to explain and educate you about the details of reverse mortgages.
Do you plan to stay in your home? One of the strongest benefits of a reverse mortgage is that it allows you to retain ownership and remain independent in your own home. If you are planning to relocate in the near future, a reverse mortgage might not be the way to go.
To apply for an FHA Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, a borrower is required to complete a counseling session with a non-profit HUD-approved counselor. Counseling is typically completed after meeting with a licensed reverse mortgage specialist. Helping Hands is approved to educate you about reverse mortgages and, when appropriate, may arrange and process your reverse mortgage application.
The reverse mortgage counselor will explain the reverse mortgage features and discuss other potential options. The counselor's role is to make sure you have a good understanding of this loan program as well as making sure you are not under any pressure to move forward.
At Helping Hands, we typically will have met with you once or twice before your counseling session. Our hope is that you will find the mandatory counseling somewhat "boring" which would mean we did an excellent job in explaining all the details.
In Massachusetts, the counseling session must be in person whereas in Rhode Island, Maine, and New Hampshire you have the option of completing counseling by telephone.
The cost of reverse mortgage counseling varies but is typically between $175 to $250. Lenders are not permitted to pay this fee for applicants. Homeowners can also contact the counseling agency to request a “hardship” exemption that allows them to pay a reduced fee or to use the loan proceeds to pay the counseling fee.
After the counseling session, the borrower receives a "certificate of counseling" that is required before the loan application can be processed. The reverse mortgage loan application process cannot begin until counseling is completed, and a fully executed counseling certificate is provided to the lender.
Helping Hands can provide you a list of HUD-approved reverse mortgage counselors in your area.
One of the appealing features of a reverse mortgage is the simple eligibility requirements.
To qualify for a reverse mortgage one borrower must be at least 62 years of age and must occupy the property as their principal residence.
You may borrow up to a certain percentage of your home equity. The exact amount is based on the age, current interest rates, appraised value and other lending guidelines. Please contact to receive specific information.
All borrowers must complete a financial assessment to determine the "ability and willingness" to be able to pay ongoing property charges including real estate taxes and hazard insurance. The good news is there are options for those who do not meet the financial assessment guidelines.
You will be required to attend an HUD approved third party non-profit informational counseling session before your reverse mortgage application is accepted. This is to protect your interests and provide a degree of safety for you.
Just because you may qualify for a reverse mortgage doesn’t mean you should obtain one. It is important to examine all of your options thoroughly before deciding if a reverse mortgage is right for you.
Helping Hands Community Partners can help guide you through the entire reverse mortgage education process and, when appropriate, arrange the reverse mortgage financing.
How much can you expect to receive from a Reverse Mortgage on your home? The amount will vary with your age, the value of your home, your current mortgage balance(s), if any, current interest rates, and other lending guidelines. Please complete the following information and we will provide you with an initial loan estimate.
Complete the fields above and then CLICK HERE for your estimated results to be emailed to you. Or, please call us at (617) 688-6310
Reverse Mortgage FACTS
- A reverse mortgage is a US Housing and Urban Development (HUD) government insured mortgage that allows homeowners 62 or older to access their home’s equity. A reverse mortgage is formally called a Home Equity Conversion Mortgage or HECM.
- No monthly payments or principal repayment are required until the home is no longer the principal residence
- Borrower must remain current on all property charges including real estate taxes, hazard insurance, any property association fees, and other loan guidelines.
- One spouse must be at least 62 years of age
- Property must be the primary home
- Property types include single-family residences, multi-family residences up to four units, town homes, FHA approved condominiums, and manufactured housing
- Borrowers must complete a financial assessment
- For those borrowers who do not meet the financial assessment, there may be other options
- U.S. Department of Housing and Urban Development (HUD) determines the loan amount based on the age of the borrower, appraised home value, current interest rate, existing mortgage balance and results of the financial assessment
- No monthly mortgage payments are required as long as all property charges are current
- The borrower retains title to the property and the equity remains theirs
- The loan is non-recourse
- Heirs may retain ownership if they repay loan
- Heirs are not responsible for paying off the reverse mortgage
- Home does not have to be mortgage free
- Loan proceeds are not considered income
- A monthly stream of cash flow for life may be available
- A reverse mortgage line of credit for life may be available
- A lump sum of cash may be available
- Lump sum cash advance to be used for any purpose
- Monthly cash advance for the remainder of the senior’s life or for a term certain
- Line of credit for easy access to cash at a later date; in many cases the unused balance grows automatically
- Any combination of the above
- The property is sold
- The borrower passes away
- The borrower no longer occupies the home as his/her principal residence for over 12 months
- Property falls into disrepair or violates other loan requirements
- Loan must be repaid in one lump sum payment
- Examples of repayment sources:
- Sale of property
- Refinancing by heirs
- Life insurance or inheritance proceeds
- Borrower or estate can never owe more than the home value
- Remain financially independent in one's home
- Provide additional monthly cash flow
- Pay off debts (increase cash flow)
- Home improvements
- Purchase a vacation home
- Medical reasons
- Financially assist children/grandchildren
- Financial & estate planning
- Avoid bankruptcy or foreclosure
- Afford at home care
- Improve quality of life (travel, new car, fun)
What Realtors Should Know About Reverse Mortgages
Did you know that a reverse mortgage can be utilized to purchase a home? A “reverse for purchase” can improve the lives of retirees, with the bonus of adding an entirely new referral source to your business.
Not all seniors want to stay in their home. Many find that with children grown and gone, a large home becomes a liability and a maintenance challenge. They are ready to downsize, or perhaps move into a more accommodating community. By utilizing a “reverse for purchase,” they won’t have to pay 100% cash for the new home and can reallocate that cash for other investments or uses. This avoids the need for a new forward mortgage with monthly payments at a time when the senior’s income may be fixed. This is a huge potential new market for real estate sales.
But many real estate agents fall prey to the same myths that reverse mortgage professionals have been trying to overcome for years. Like many Americans, Realtors think that reverse mortgages are only for poor people, that the homeowner loses equity or control of the property, that reverse mortgages are expensive, that there will be nothing left for the children, etc. These objections must be overcome using education-based responses that clear up these misperceptions.
You may ask why a senior would go the reverse mortgage route to buy a home when they may be able to pay cash or qualify for a new mortgage. It is a case of better cash management. By utilizing a “reverse for purchase” the borrower can conserve cash and, in many cases, improve their retirement security.
Many in the real estate business are aware of the financial pressures older home buyers face, and the difficulty of obtaining traditional mortgage financing for seniors. Having the “reverse for purchase” option gives a real estate agent a powerful new tool to help older buyers.
Before real estate agents attempt to have a client use a reverse mortgage to purchase a home, please make sure you get informed. You are welcomed to contact us for a one-on-one training session about how a reverse mortgage for a purchase works. We’ll be happy to explain all of the details.
A Reverse Mortgage is “…a way to provide a steady stream of tax-free cash flow that can last the rest of a retiree’s life.” -- Wall Street Journal, June 16, 2012
Any financial advisor who does not fully understand the process and possibilities of today’s reverse mortgage may be leaving an important planning tool on the table. The dire picture of the reverse mortgage as a last, desperate measure has been replaced by a financial option that allows a senior to have financially independent lifestyle.
A growing concept in financial planning is to utilize the line of credit feature in a reverse mortgage. The Reverse Line of Credit (an R-LOC) is created by converting a homeowner’s illiquid “disregarded” home equity into accessible tax-free cash if or when needed with no required monthly repayments.
For most people, the two largest retirement assets are investment savings and their home. However, due to its illiquidity, the home has not been a part of the retirement planning conversation. But a paradigm shift is occurring in retirement planning. Real estate is no longer a “disregarded asset” on the household balance sheet. A R-LOC (Reverse Line of Credit) now gives you access to this critical asset to help ensure your long-term retirement success.
The R-LOC is an advanced, yet simple planning strategy that can solve the retirement quandary of balancing future quality of life desires, needed cash flow requirements and protect against the uncertainties of inevitable life events. One of the greatest advantages of an R-LOC is it does not detract from an existing retirement plan. On the contrary, an R-LOC complements and strengthens your current strategies and provides the opportunity to better fund your plan.
The R-LOC capitalizes on the features of the improved federally insured Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage. The U.S. Department of Housing and Urban Development (HUD) has strengthened the HECM program with increased protection.
As a result, the R-LOC is now better suited for a wider range of homeowners who desire to optimize their current retirement plans without changing their lifestyle and standard of living.
An R-LOC allows a qualified homeowner 62-years old or older to have access to a percentage of their home’s equity for use today or for a rainy day. In essence, a Reverse Mortgage Line of Credit (R-LOC) provides a new source of tax-free cash if desired or as needed, without giving up control or equity and, most importantly, providing the option to never again make a monthly mortgage or home equity loan payment. Note: the borrower must remain current on real estate taxes, property insurance, maintenance of the home, and met other loan guidelines.
- Available line of credit that grows over time regardless of home value or income qualifications
- If or when interest rates increase, the available line of credit grows at the higher interest rate
- No required monthly mortgage payments
- Non-recourse, with no personal guaranty and no risk to estate assets
- May close in a trust or life estate
- Not based on health
- No restrictions on use of cash
Every retirement plan should include provisions for the unexpected. The challenge is being prepared for the unknown without weakening a carefully constructed blend of investments and savings.
The reverse mortgage line of credit "R-LOC" is a way to provide a ready source of tax-free cash without disrupting or interfering with current retirement plans. By tapping into the unused equity in the home an R-LOC helps to build a financial cushion that can be used for unforeseen expenses or unexpected opportunities.
Because the R-LOC creates the opportunity to access cash whenever needed and with no use restrictions, the potential retirement planning opportunities are almost limitless. Please contact us to learn more about how a reverse mortgage line of credit may augment your retirement strategies.
Let us help you better understand the reverse mortgage process.
Read How People Just Like You Are Using Their Reverse Mortgages. There are many reasons for a senior homeowner to consider a reverse mortgage, and just as many ways to use the tax-free money you can receive from a reverse mortgage. Helping Hands Community Partners would like to share with you just a few examples of how a reverse mortgage has helped to improve the lives of pre-retirees and retirees.
Many financial advisers counsel their clients to wait to enroll in Social Security to maximize their benefits. A reverse mortgage may fund cash flow needs...
Studies have shown that one is usually better off delaying taking Social Security to maximize lifetime benefits. Starting benefits at an early age can be a costly decision, resulting in significantly less income over one’s lifetime. Utilizing the tax-free cash proceeds from a reverse mortgage to cover living expenses may be a smart approach to maximizing the Social Security income you’ve worked for and are entitled to receive.
Helping Hands is available to explain and educate you about the cost and benefits of a reverse mortgage so that you may have an informed conversation with your financial planner. Helping Hands does not give financial investment advice.
“75 is the new 55” and people want to be able to afford an active retirement. A reverse mortgage allows for activities…
Few people like to be thought of as a “senior.” No matter your age, you probably think of yourself at least 20 years younger. A growing percentage of older people can continue leading a very active lifestyle. It will no longer be unusual for 80-year olds to be biking, hiking, or even running marathons. Taking a local long weekend or active trip around the world will be commonplace. These activities cost money. A reverse mortgage is one way to fund an active lifestyle while not depleting one’s retirement investments.
A reverse mortgage is a non-recourse loan. With proper planning, you may hedge the home value by in a market downturn…
Some people believe America’s best years are behind us. Others have a rosier outlook on the future, but would like some form of financial protection in case interest rates become very high or property values plummet again. For those planning to remain in their homes long-term, a reverse mortgage line of credit is one option to hedge against economic calamity.
An unused reverse line of credit will increase in availability over time independent of the actual home value. In addition, if interest rates increase the rate of growth on the unused line of credit will also increase. Plus, a reverse mortgage is a non-recourse loan, so one has access to the cash even if the actual property value is less, placing no other asset at risk.
A reverse mortgage solves the challenge of wanting to work versus needing to work...
Many older people desire or need to continue to work. A large number are self-employed, work part-time or have seasonal income. A reverse mortgage gives the option to convert untapped home equity into cash to supplement changing income levels. Wouldn’t it be better to work because one wants to, rather than having to work? One example are independent real estate agents who have peaks and valleys in sales. A reverse mortgage can help with cash flow needs.
When the younger generation needs financial help with the down payment when purchasing a home, a reverse mortgage is one solution…
Sometimes adult children who are purchasing a home need help with a down payment. Parents or grandparents are called upon to gift or lend money to help with the purchase. For parents/grandparents 62 years old or older with home equity, one option to consider before giving away cash or liquidating investments is a reverse mortgage. It’s giving the future potential inheritance today without impacting anyone’s cash flow or mortgage payments while allowing the parent’s/grandparent’s retirement investments the opportunity to continue to appreciate.
When people part ways, often one-person desires to retain the home and the other seeks cash. Instead of liquidating investments, a reverse mortgage provides another option…
A growing percentage of older people seek divorce. Often one spouse desires to retain the home, while the other spouse needs the equity to move forward with their life plans. A reverse mortgage provides the option to convert the illiquid home equity into cash for the departing spouse while allowing the remaining spouse to afford to live in the home because a monthly mortgage payment is not required.
Having cash to fund a “bucket list” can be a challenge. A reverse mortgage gives the freedom to…
Those who are in financial balance and have reasonably planned for potential future life events may desire to check items off their “bucket list.” Maybe it’s a trip with the extended family, building an addition, or even buying a recreational vehicle (RV) and touring America. But a “bucket list” requires cash. Instead of liquidating appreciating investment accounts, a different approach is to use home equity to pay for the fun things in life. A reverse mortgage has no restrictions on how the funds are used.
For many, leaving a positive mark while living is an important goal. A reverse mortgage can fund the gift…
Many charities, schools, and places of worship are the beneficiaries of large gifts or bequests. A reverse mortgage gives an individual the opportunity of gifting while they are alive by converting a portion of the illiquid home equity into cash without creating a monthly debt payment obligation. The benefits of this approach include the ability to witness how the gift is being used during their lifetime while remaining socially active in their cause or faith.
Many adult children financially support their parents or are concerned they will need to in the future. A reverse mortgage may be a solution...
Many children in their 40s and older will face the financial challenge of funding their children’s needs while supporting their parents’ quality of life. Most parents desire to remain independent and resent taking money from their children. Worse, the adult sibling’s relationships will be strained if one child financially supports the parents while the other does not have the funds. A reverse mortgage for the parents is one option that will provide tax-free cash for the parents, thereby reducing or eliminating financial stress on the children.
Unlike traditional mortgages, a reverse mortgage allows a home to be placed in a trust or life estate for proper estate planning…
A common fear for a person entering a nursing home is that all of their home equity will be sacrificed to pay nursing home costs. With proper estate planning, this scenario can be avoided by utilizing a trust or life estate. Unfortunately, traditional loan programs require the property to be in the name of the borrower. But a reverse mortgage may allow the property to be held in a trust or life estate thereby providing a vehicle to shield and allow the equity to passed to the next generation.
The emotional and financial stress of a parent with capacity issues can be devastating. A reverse mortgage is one way to fund quality of life…
As parents age, one sad reality is dementia or Alzheimer’s disease. Many families desire to care for the parent on their own but face financial burdens of not being able to work or being able to afford in-home care. Even though a parent may not be able to handle their financial affairs, a reverse mortgage allows a valid power of attorney or guardianship to obtain a reverse mortgage on behalf of the parent. This can provide needed monthly cash flow to maintain the parent’s quality of life, while offsetting the financial strain of the unpaid caregiving children.
Older homes often require substantial and costly repairs, such as roof replacement or a new septic system. Bank financing may be difficult to arrange…
Many older people have lived in their homes for 20, 30, and even 50+ years. And a large percentage plan to live the remainder of their years in their home. One significant financial challenge is to be able to afford to maintain the home. That small roof leak may turn into a need for a new roof, or the questionable septic system can no longer be ignored, or it’s time to paint the house, or make the home better accessible with a ramp or staircase chair lift. The fact is, owning and affording a home requires maintenance that often demands a large sum of money. A reverse mortgage is one way to use home equity to pay for the improvements. The good news is the money borrowed is being reinvested right back into the home which will help to maintain or increase its value.
Life brings unexpected and sometimes unavoidable health crises that may lead to tremendous financial burdens….
Everyone knows someone faced with an unexpected health event. Many have personally faced the challenge of overcoming a health emergency, or a prolonged or chronic medical issue. Sadly, many people do not have the financial wherewithal for treatment, medicines, or home care. For those fortunate to own a home with equity, a reverse mortgage is one way to obtain the money needed to pay unexpected medical bills. A reverse mortgage line of credit provides a safety cushion against just such a possibility.
Few people desire to enter a nursing home, but many are financially forced to because they cannot afford at home care or long-term care insurance…
Studies show that over 25% of the population will need some form of long term or at home care during their lives. The challenge is that not everyone can qualify for or afford long term care insurance. They must hope they are one of the lucky ones who never need care. If care is required and one does not have the cash, their quality of life is impacted, and financial resources strained. This creates tremendous stress that may further exacerbate the situation. A reverse mortgage line of credit is one approach that can provide funds to pay for long term care, if needed.
As one ages, permanent mobility challenges may arise that require the home to be modified which may be costly. A reverse mortgage may provide funds to…
A fact of life is as we age we may face physical changes and challenges. Walking upstairs or using a wheelchair may impact the joy of home ownership. The stereotype of a sloping plywood ramp to the front door or a main floor room hastily turned into a bedroom can be avoided. A reverse mortgage can provide the funds to have a home properly converted to address mobility and access issues.
Many individuals have substantial assets but report very little income, which results in difficulty obtaining conventional bank financing…
Former Federal Reserve Chairman, Ben Bernake, arguably one of the most powerful financial leaders on the planet, was denied a loan. Like Bernanke, many high net worth individuals have ample assets but may be denied a traditional mortgage due to several reasons. Fortunately, a reverse mortgage has different lending guidelines. For those who have difficulty demonstrating the ability or willingness to pay real estate taxes, property insurance, or other monthly debt payments, one solution is for the lender to set aside access to funds to pay the real estate taxes, insurance and any other property charges based on the life expectancy of the youngest borrower. This may allow borrowers to lead a higher quality of life and to be able to afford to live independently.
Before obtaining a reverse mortgage, each potential borrower should meet with an experienced trustworthy reverse mortgage professional. Helping Hands Community Partners employs Certified Reverse Mortgage Professionals (CRMP) who are available to answer all your reverse mortgage questions and are passionate about educating older homeowners and their families about reverse mortgages.
How You May Use Your Reverse Mortgage?
There are few restrictions on how you may spend the money you receive from a reverse mortgage. When your reverse mortgage closes, any existing mortgages or liens must be paid off. The remaining available loan proceeds may be used as you wish. After all, it is your money! It comes from the equity you have built up in your home over the years. You can spend your tax-free money any way you’d like with no required monthly mortgage payments. But please note – during the life of the loan, you must remain current on your real estate taxes, hazard insurance, any other property charges, and abide by the loan terms.
Here are some ways clients have used their reverse mortgage:
The pressure of monthly mortgage payments or the increase in mandatory home equity lines of credit can be so stressful that one's quality of life is diminished. By obtaining the reverse mortgage and eliminating the need for monthly mortgage payments, your cash flow will increase.
If you have credit card debt, unsecured loans or other bills piling up, a Reverse Mortgage can help you get out from under the monthly burden of making payments.
For many of our borrowers, the ever-increasing cost of real estate taxes and property insurance is financially crippling. A reverse mortgage has been the solution to this quarterly and annual expense.
Since you’ll be staying in your home, now is a good time to make long overdue repairs, remodel your kitchen, bath, or basement, or make enhancements to your décor. For some of our clients, funds were used to make their home better accessible with ramps, staircase chair lift, and other safety features.
In tough economic times, we all want to be able to help out financially when our children or other loved ones are suffering. The money you’ll get from your reverse mortgage can be used to ease the financial pressure on family members.
You may use the money from your reverse mortgage to pay off hospitals, doctors, at home care, or long-term care facilities. Or, set the money aside for unexpected medical costs in the future.
The cost of college today is rising rapidly, yet a good education has never been more important. You can help bridge the gap between financial aid and college costs so that a child or grandchild will not be unduly burdened with education loans upon graduation.
You deserve it! Plan a trip to see faraway family members, or a warm weather getaway during the coldest winter months. It’s great to know you have the money to go where you please!
Some reverse mortgage borrowers have no desire to use their funds today but instead want access to a “reverse line of credit” that continues to grow, while keeping funds readily available whenever they may need cash.
Not everyone should get a reverse mortgage, but everyone should become better informed about them. Before obtaining a reverse mortgage, each potential borrower should meet with an experienced trustworthy reverse mortgage professional. Helping Hands Community Partners employs Certified Reverse Mortgage Professionals (CRMP) who are available to answer all your reverse mortgage questions and are passionate about educating older homeowners and their families about reverse mortgages.
Despite being available for decades, reverse mortgages remain misunderstood by most people. Here are the seven most common misconceptions about reverse mortgages, along with the facts you should know.
FALSE: You continue to retain ownership of your home. The lender does not take control of the title. Reverse mortgage borrowers may remain in the home for as long as they wish so long as all property charges remain current, the property continues to be the primary home and maintained, and other loan requirements are met.
FALSE: A reverse mortgage is a non-recourse loan. The lender can only derive repayment of the loan from the proceeds of the sale of the property. All remaining equity is yours or your heirs. Your heirs owe nothing even if the property loses value.
DEPENDS: A reverse mortgage has no health requirements, but recent guideline changes now require a financial assessment on the ability and willingness of the borrower to have sufficient cash flow to pay for all property charges and meet residual income requirements. The good news is there may be other options if one does not satisfy the financial assessment criteria. The key is to discuss your specific situation with one of our licensed professional and experienced reverse mortgage specialists.
Please contact us if your loved one has mental capacity challenges, guardianship, or power-of-attorney situations. Specific legal advice will likely be required.
FALSE: There are never any monthly principal or interest payments required. However, you must remain current on all property charges such as real estate taxes and hazard insurance, and continue to meet other loan requirements. You do always have the option to make payments to reduce your reverse mortgage balance without any prepayment penalty.
FALSE: You may have a mortgage or other debt on your home when applying for a reverse mortgage. The mortgage will be paid off when you receive your reverse mortgage funds.
FALSE: Not all seniors have a great need for immediate cash or want a monthly stream of cash. More and more high net worth individuals and financial planners are utilizing the availability of a reverse mortgage line of credit to augment existing retirement strategies
DEPENDS: A reverse mortgage does usually cost more than a conventional loan. However, it is much less expensive than the moving costs and real estate commission of selling your home not to mention the emotional pain of relocating and the associated expenses of a new property!
It is important to review your particular situation with an experience reverse mortgage professional so that you receive an accurate cost estimate.
FALSE: Almost everyone has heard the words reverse mortgage but only a very small percentage of people are able to explain how they work. When people don’t know the facts about something they tend to fill in the blank with a negative connotation. This is a human genetic response. That is why most people will say reverse mortgages are “bad” but then not be able to explain why.
Helping Hands Community Partners invites you to get the facts. We will be happy to explain all the details so that you will be able to make an informed decision about the merits of a reverse mortgage. And, when appropriate, we can help you obtain a reverse mortgage.
