One of the most misunderstood mortgage programs is a Reverse Mortgage. To be fair, early on there were some abuses, which in large part have been remedied. Today, a Reverse Mortgage is the choice for many senior homeowners approaching or in retirement.
Here is a list of reasons why.
- No mandatory, monthly Principal and Interest Mortgage payment is required.
- Responsibility for repayment is transferred from the borrower to the home.
- The term of the loan is age 150 of the youngest borrower.
- Safeguards such as a required 1 hour counseling by an independent 3rd party, cap on fees, protections for non-borrowing spouses, borrowers providing income documents to prove they can afford the property taxes, homeowners insurance and maintenance on the home.
- When a senior homeowner taps into their equity either by lump sum, monthly installments or a line of credit that earns compound interest, it increases the chances of them not outliving their resources.
- Unlike a Home Equity Line of Credit, a Reverse Mortgage Line of Credit cannot be cut, frozen or payment required.
- Proceeds from a Reverse Mortgage are not taxable and usually don’t affect government benefits.
- The borrower can use the funds from a reverse mortgage however they wish, except purchase an annuity.
- A Reverse Mortgage can be paid off at any time as there is no prepayment penalty.
- There are fixed or adjustable rate options available.
- The interest rate is protected at application, if it goes down prior to closing, they will receive the better interest rate.
- For most homeowners their equity is at risk should there be a market correction, with a Reverse Mortgage, about half of the equity is sheltered from a market downturn.
- In most cases, the only out of pocket fees are the counseling ($125-$190) or the appraisal ($675), the other fees are paid from home equity.
- From application to closing is 30-45 days.
To learn more and to see if a Reverse Mortgage can help you have a happily ever after retirement, reach out and let’s see if this might make sense for you.
Get to Know Kevin A. Guttman Reverse Mortgage Specialist
As you can see there are a lot of steps to getting a reverse mortgage but it doesn’t have to be complicated when you have a professional help you along the way. Contact our team today to get the wheels in motion a (877) 251-9709