Reverse Mortgages

Reverse mortgages are becoming more and more common and though their popularity is growing they are not well understood by many people who are considering them. With everyday living expenses rising along with increases in taxes, insurance and maintenance costs, seniors are finding relief by tapping into the equity in their homes. The reverse mortgage option allows homeowners the ability to tap this equity without the obligation of a monthly mortgage payment.

If you are considering a reverse mortgage make sure you get the whole story and compare your options. In some cases a traditional cash-out refinance may be an appropriate solution.

First, let’s consider the benefits. Contrary to what you may have heard, here are four things that can happen if you take out a reverse mortgage:
  1. You never make a mortgage payment.
  2. You never give up title to the home.
  3. You will never be forced to sell.
  4. You will never owe more than the home’s value.
Some of the guidelines are that you must be at least 62 years of age and you must have adequate equity in your home. You can borrow the equity in your home without ever having to make a payment for as long as you live in the home. The funds are available in a lump sum, as monthly payments to the borrower, as a line of credit or any combination of options. The loan may be paid off anytime but must be satisfied when the borrower no longer occupies the home as a primary residence.

Here are some examples of how a reverse mortgage might benefit many seniors:
  • There are no income or credit requirements for a reverse mortgage because the lender is not relying on you to make any payments. With traditional mortgages your income and credit are evaluated in determining your eligibility regardless of the amount of equity in your home.
  • Homeowners in need of long-term health care can afford to stay in their home. Reports by the National Council on the Aging and the Centers for Medicare and Medicaid Services have cited the benefits of reverse mortgage programs. One report is titled “Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages to Pay for Long-Term Care.”
Now the downside:

Reverse mortgages are expensive. Closing costs can be considerably higher than with traditional mortgages and mortgage insurance is required in all cases. The costs come out of the equity in your home and not your personal savings so you may not fully realize how much you are spending. If you can qualify for a traditional home mortgage you will have access to many more products and still be able to tap into your home equity while keeping your payments affordable.

If you are currently in a reverse mortgage you should know that you may benefit by refinancing into a traditional mortgage. If you would like to enjoy the confidence of knowing that the most qualified mortgage specialists in the business are working on your behalf, please call or e-mail me to set up an appointment to consider all of your options prior to making any decision.

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