REVERSE MORTGAGES

A Reverse Mortgage is a tax-free source of income designed to help seniors address their financial needs and help in their overall financial planning. Since seniors are the fastest growing segment of our population, this type of mortgage can provide you with financial independence. You will continue to hold the title to your home during the term and your credit history is not a factor in determining eligibility. A reverse mortgage will not affect your Social Security or Medicare benefits. If you are 62 or older and own your own home or have a small mortgage loan balance you could qualify for a reverse mortgage.

HOW DOES IT WORK?

A reverse mortgage allows you to borrow up to one-half of your homes equity, payable to you in several ways: A lump sum, a line of credit or a combination of both depending on your needs. These funds are yours to spend in any way you choose. The homeowner will still be responsible for maintaining and paying for the insurance coverage and applicable real estate taxes on the home. You can never owe more than the value of the home and you can choose to repay the debt at any time without penalty. The principal balance of the funds advanced to you plus interest and any other related fees are due upon the death of all parties involved in the transaction, if the house is sold, if the property is vacant for twelve months or greater, or if the loan terms and conditions are violated.

WHAT ELSE SHOULD YOU KNOW?

The application process for obtaining a reverse mortgage is similar to the traditional home mortgage loan. An appraisal, title search and property inspection will be performed. In most cases the lender will charge a loan origination fee, upfront mortgage insurance premium, monthly insurance fee on your outstanding loan balance and a monthly service fee. These fees and costs are usually capped and may be financed as part of the reverse mortgage. Before you are obligated to pay any fees, you must complete an education counseling session with a homebuyer counselor. Not every home qualifies for a reverse mortgage and we suggest that borrowers always contact and consult with their financial planner or a benefits specialist at their local Agency on Aging.