What are Reverse Mortgages
A Reverse mortgage is a highly regulated FHA insured loan regulated by HUD. This type of home financing enables senior homeowners to convert a portion of their properties’ equity into cash. The equity payment can be taken in a lump sum or can be broken into monthly payments or a combination of both. There is also an option to convert the home’s equity into a line of credit.
The most unique characteristic of reverse mortgage programs is that no repayment is needed until the homeowner no longer uses the property as their primary residence.As a financial tool, reverse mortgages can be very beneficial, but they are not for everyone. Most industry professionals agree that reverse mortgage programs require experience that only comes with specialization in the reverse field.
Please keep in mind that the reverse mortgage industry in constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for the most up-to-date guidelines.
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Potential Benefits of Reverse Mortgages**:
- No monthly payments and no repayment is required until all borrowers are no longer using their property as their primary residence, all parties on the deed pass away, or they fail to pay their property taxes and homeowners insurance.
- Tax free monthly income*
- Payments can be used for whatever the borrower wants, including home renovations, consolidating debt, paying for medical expenses and insurance costs, and traveling and other leisure activities
- Reverse mortgages provide a tool that allows seniors to tap into the equity they have in their homes. There are no income or minimum credit score qualifications. In today’s tightening credit markets, reverse mortgage products may be one of the best solutions available to most retired homeowners.
- Possibly the greatest benefit of all, reverse mortgage programs may help seniorsremain in their homes that they have worked so hard to pay for throughout their lives.
- A reverse mortgage is what we call a non-recourse loan. This means that with a reverse mortgage you are not personally liable. The liability is only to the extent of the value of your home at time of sale, death or vacating the premises as your permanent residence. You are not liable nor are your heirs personally liable; they can either sell the home at time of your death or keep the home and pay off the remaining balance of the reverse mortgage.
*Consult a financial tax professional for details.
**Loan benefits and parameters are subject to change. Consult with a mortgage professional for up-to-date information.