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Reverse Mortgage for Seniors

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Reverse Mortgage for Seniors

Tuesday, July 11, 2017 1:56 PM

If you're 62 years of age or older with equity in your home, a reverse mortgage may turn that equity into cash. You may use the money to repay your existing mortgage, then take any remaining funds as a lump sum, a line of credit, monthly income or any combination thereof. Unlike a traditional mortgage, no repayment is required until the home is sold or the owner permanently moves out or passes away. Best of all, proceeds are tax-free and you retain title to your home.

How does a reverse mortgage work?

One of your most important assets is your home, and usually holds a certain amount of equity. Because of this equity, when the time comes someday for the loan to be repaid, the value of the home when sold is able to re-pay the loan. Any equity remaining after the home is sold belongs to your heirs. Meanwhile, you are able to live in the home for as long as you like without making payments. A reverse mortgage does not require monthly payments.

Will I still own my home with a reverse mortgage?

Yes. As long as you pay your taxes and insurance and otherwise comply with the loan terms, you will retain ownership of your home. The bank only takes title of your home if you do not meet these obligations. As long as you pay your taxes and insurance and otherwise comply with the loan terms, you remain the owner of the home and may live there for as long as you want. Any additional equity remaining after your loan is paid back belongs to your heirs.

Are reverse mortgages a last resort option?

Not at all! A reverse mortgage can be a very powerful and intelligent strategic financial planning tool available to the senior population that can supplement retirement income and manage retirement risks. However, the reverse mortgage should be evaluated and customized to your particular need.

How do I know if I qualify for a reverse mortgage and how much money can I receive?

To qualify for a reverse mortgage, you must:

  • Be at least 62 years of age
  • Own your home
  • Occupy the home as your primary residence

The amount of money you can receive depends on:

  • Your home's value (as appraised by an independent appraiser).
  • Your age.
  • The interest rate on the reverse mortgage.
  • Any mortgage balance or liens against the property.

Reverse mortgage action steps:

  1. Education - Speak with a qualified reverse mortgage professional to learn more about the reverse mortgage program, what options you may qualify for, and an analysis of your particular situation.
  2. Counseling - HUD counseling is mandatory for all reverse mortgage borrowers. Once you understand your options and are ready to begin the application process, call a certified reverse mortgage counselor and schedule an appointment to receive your counseling. The counseling is a protection mechanism for the borrowers to make sure that they have been truthfully educated about the reverse mortgage program and they understand what obligations they have to meet in order to keep their loan in good standing.
  3. Application - Meet with a reverse mortgage specialist for consultation and guidance through the application process.
  4. Appraisal - Upon receiving your HUD counseling certificate, and signed application, a reverse mortgage professional will arrange for a full FHA appraisal of your property.
  5. Processing - The lender will begin to process your paperwork.? This process includes the appraisal, title report, and checking the balance of any liens/mortgages to be paid.
  6. Underwriting - The lender will forward your file to the load underwriter for final approval and will work to satisfy any requirements needed to close the loan.
  7. Closing & Funding Dispersement - Once your loan has been approved by underwriting the lender will contact you to arrange for the signing of your final loan documents.

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Last Revised 11/15/2017