Welcome! We are excited to help you understand how reverse mortgages work. Here is a quick look.
The majority of people would prefer to stay in their homes during their retirement years. For many people, finding the money to do this is a concern. You will hear a great deal about the term “Aging in Place” in the coming years. If you want to stay in your home during your retirement years, we want to empower you with the knowledge and information that you need to do so.
A Reverse Mortgage might be exactly the tool you are looking for to make this happen. You have likely seen the commercials on T.V. or heard about them but how do they really work?
They are not as complicated as they may first seem. Let’s jump right in. The application process is the same as any other loan. A Reverse Mortgage also known as a Home Equity Conversion Mortgage (HECM) is a loan for homeowners that are aged at least 62. A Reverse Mortgage uses a portion of your home’s equity as collateral. The more equity you have the better but it’s okay to have a current mortgage on your home. The proceeds from your new Reverse Mortgage may be used to pay off the current mortgage (if you have one) which will totally eliminate any current mortgage payment you have! If you have additional equity, you can access that cash tax-free!
The amount that is available to you generally depends on several factors which include your age (at least 62 and older), the current interest rate, the appraised value of your home, and the lending limits (currently $625,500 set by the government). So far so good, right? For a more in-depth explanation of how much money you can receive please click here.
You do not make a monthly payment with a Reverse Mortgage so the mortgage amount you owe grows larger over time. As your mortgage increases, the amount of equity you have left after selling or paying off the loan generally grows smaller. The amount owed at the conclusion of a reverse mortgage (when you no longer occupy the home) is either the amount of the home’s value or the amount of the current mortgage, whichever amount is less. Also, your home can continue to appreciate just the same as if you had a regular mortgage, increasing your equity as time goes by. You are still responsible for real estate taxes, insurance and maintenance of your home.
Looking for more info? You’re in luck!
Reverse Mortgage 101: Seven Core Questions for Reverse Mortgage Shoppers
- How Does a Reverse Mortgage Work?
- Who is Eligible for a Reverse Mortgage?
- Which is Best: Fixed or Adjustable Rate Reverse Mortgage?
- How Do I Find the Perfect Reverse Mortgage for My Needs?
- What is the Reverse Mortgage Process?
- How Do I Find a Quality Reverse Mortgage Banker?
- How Will I Receive the Money?
For an explanation of Reverse Mortgage 101 click here