Reverse Mortgage or Reverse Home Mortgage is a great financial product for seniors to use in their retirement plan. When looking for ways to get cash from their home, most people consider selling their house or borrowing against their home equity and making monthly loan repayments on a home equity loan.
With a Reverse Home Mortgage, you get all the benefits of selling your house and all the benefits of getting a home equity loan - but you can still live in and retain ownership of your home and you don’t have to pay back the loan. No matter how you structure a Reverse Mortgage, you typically don't pay anything back until you die, sell your home, or permanently move out. And, your ability to secure a Reverse Mortgage is not dependent on your credit history, income level, health or any other factors that might make a home equity loan expensive or problematic.
By converting your home equity into income, a Reverse Mortgage is a way to stay in your home and get cash to use for any purpose. There are no restrictions on how you can use money from a Reverse Mortgage. A Reverse Home Mortgage sounds too good to be true. Traditionally, the big disadvantages of a Reverse Mortgage were the high closing costs. However, new legislation is lowering those costs – making a Reverse Mortgage even more interesting to seniors. The even better news is that the lending limits are also increasing – meaning that you can access more capital from your equity than before. A reverse mortgage is a unique loan that is based on the value and location of your home and allows for access to an approved portion of home equity. The loan is available on your primary residence and requires no payment until you sell the home or it passes into your estate. Homeowners must be 62 years of age and older. The amount that is available increases with the age of the borrower. Funds are based on the value and location of the home. Current interest rates apply to the loan Money can be received as a lump sum, in monthly payments, as a line of credit, or in any combination of these forms of payment. Since reverse mortgage proceeds are a loan and not income, they are not subject to taxes. In addition, funds will not affect Social Security or Medicare benefits. Reverse mortgage programs are available through FHA/HUD (U.S. Government-sponsored and insured), FannieMae and Financial Freedom Cash Accounts (jumbo accounts for higher-valued properties). Typically, closing costs with the exception of appraisal and termite inspection are financed by the reverse mortgage False, You or your estate retains ownership. A reverse mortgage is a lien like any other mortgage False: A reverse mortgage does not affect your Social Security or Medicare benefits. However, it could affect eligibility for Medicaid or other state assistance programs, so check this out beforehand. False: The reverse mortgage is a non-recourse loan. This means that the lender can only derive repayment of the loan from the proceeds of the sale of the property. The loan payoff balance can never exceed the net sale proceeds if and when the house is sold.