Move Forward and Reverse!

A Reverse Mortgage is a product of the future, in both a conceptual and literal sense.  It is the only mortgage product that distributes equity to the homeowner without any immediate repayment requirements.

Reverse Mortgages aren’t like traditional mortgages and home equity loans that require regular payments be made until the loan is paid off.  Rather, a reverse mortgage pays out the equity in the home in the form of a loan that is not paid back until the homeowner moves, sells or passes away.  The proceeds of the reverse mortgage can be received in a lump sum, as a line of credit (accruing interest only on the outstanding balance), or as a predetermined periodic payment. 

For the right client, the benefits include:

Aging in Place.  The ability to retain homeownership and independence, free from financially worry.

Tax-Free Money.  Currently the Internal Revenue Service treats monies received from a reverse mortgage as loan advances and not taxable income; that said, a homeowner should always consult their tax professional before moving forward.

Freedom and Flexibility.  The money received from a reverse mortgage transaction is the homeowner’s to use in almost any way they choose.

Given the overall benefits of the program, the reverse mortgage program should no longer be considered a last resort.  In many cases, it should be the first.

Common Reverse Mortgage Myths Revealed:

The bank will assume ownership of my home if I get a reverse mortgage.  False!  The homeowner retains title to the property.   The lender extends a loan and holds a secure lien position but no ownership is transferred.

A reverse mortgage is for desperate people who have little income.  False!  A reverse mortgage can be a valuable tool used in a variety of situations to enhance quality of life and better manage assets.

I could be forced out of my home.  False!  Federally insured reverse mortgages specifically state that the homeowner cannot be forced out of their home.  The only requirements of a reverse mortgage are that the homeowner continues to keep the home as their primary residence, in good state of repair, with the property taxes paid and homeowner’s insurance coverage in place.

I have to have a good credit score to qualify for a reverse mortgage.  False!  A reverse mortgage has no credit score requirements.  Qualification is based on equity, age, and occupancy.