Financial Services Help

What is a reverse mortgage?

A reverse mortgage is a financial instrument that allows homeowners over 62 years old to access money that they have built up as equity in their home. They are designed to strengthen a senior’s personal financial situation without a monthly payment burden during the lifetime of the loan.

Does my current mortgage need to be paid off?

No! These loans are designed for owners with equity, but the home does not need to be completely paid off. In some cases we see no money taken from a reverse mortgage, but simply use it to eliminate their mortgage payment.

Any mortgage that is in place will have to be paid off as a part of the reverse mortgage transaction.

Can the lender take my home?

No. The home stays in your name, and you have complete control of your property. You are required to keep the property maintained, and pay the taxes and insurance, just like any other loan, but you would do that anyway! As long as the home is your primary residence, you are protected.

What if I can’t stay in my home due to illness or other reasons?

If all the homeowners permanently leave the home, then the loan becomes due and payable. Extended vacations or hospital stays are not a problem. Absences of over 12 months should be discussed with the lender.

What can I do with the money?

There are NO restrictions on how funds are used. Common uses for reverse mortgage funds include:

• Supplementing retirement income
• Buying a new car
• Making home repairs
• Planning your estate
• Traveling
• Paying for your grandchildren’s education
• Covering Medical expenses

How do I get my money?

You have options in how you take the money. You can choose a lump sum, a monthly payment amount, a line of credit or a combination of these.

Will my reverse mortgage affect my Social Security?

No. Reverse mortgages will not affect Social Security or Medicare. These programs are not based on assets of the recipient, and so are not affected by the addition of a reverse mortgage. Other benefits such as SSI could be affected depending on the particulars of the program.

How is a reverse mortgage different than a regular mortgage?There are three primary differences;

• There are no income requirements
• There are no credit requirements, and
• No loan repayment for as long as you live in the home

Aren’t reverse mortgages expensive?

There can be significant costs associated with a reverse mortgage, however most of these fees can be financed as a part of the mortgage. For those that are concerned with fees, some programs offer reduced or no fees.

What else do I need to know?

• You can never owe more than your home is worth.
  • Reverse mortgages are “non-recourse” loans meaning that the lender can never look to anything or anyone beyond the value of the home. Your estate will not owe anything to payoff the mortgage balance. In addition, some programs allow for “setting aside” a protected portion of your home’s value that will stay with your estate.

• There are no restrictions if you wish to sell the home.
  • The balance of the reverse mortgage is paid off as a part of the sale just like any other loan.

• You can’t be pressured into a reverse mortgage
  • ALL of these programs require counseling from an independent counseling agency. In addition, we welcome you to bring your advisors with you as we are discussing the programs. We would also be happy to provide you with booklets from AARP –Home Made Money, a consumer’s guide to reverse mortgages, or Fannie Mae’s Money from Home – A Guide to Understanding Reverse Mortgages.

We believe this can be a program that can improve your life dramatically, but we want to make sure you are making an informed decision. We also have ongoing seminars “Real Estate in Your Golden Years” – Call for dates and times! An