Reverse Mortgage at a Glance
A Reverse Mortgage, allows you to borrower against your home’s equity and turn it into spendable cash. Instead of making payments, you’ll receive funds, either in a lump sum or on a monthly basis. Like many loans, Reverse Mortgages are for a specific purpose and have unique eligibility requirements:
- You must be at least 62 years of age
- No minimum credit score or income verification
- Primary residence, 1-4 unit properties only
- Reverse Mortgage Education Course required for the FHA program
- Fixed and adjustable rates available
- Government-backed and private loan options available
Contact one of our Mortgage Consultants to find out if a Reverse Mortgage makes sense for you.
Benefits
Secure Your Retirement: Reverse mortgages are ideal for retirees because they allow you to turn your home’s equity into spendable cash. Use the money to help cover expenses in retirement.
Stay in Your Home: Instead of selling your home to liquify your asset, you can remain living in the home you love.
Pay Off Your Existing Home Loan: It’s ok if you have an existing mortgage. You can use the proceeds of a reverse mortgage to pay off an existing home loan and free up money to put toward other expenses.
No Tax Liability: According to the IRS, money you get from a reverse mortgage is considered to be a loan advance rather than income. That means the funds aren’t taxed, unlike other retirement income such as distributions from a 401(k) or IRA.
You’re Protected if the Home’s Value decreases: If the value of your home ends up being less than the amount owed on the reverse mortgage, your heirs don’t have to worry about paying the balance.
Costs and Limits
Mortgage Insurance: In addition to the usual loan costs, mortgage insurance is required. The initial, one-time insurance fee is 2% of the balance. The annual premium is 0.5% of the balance.
Borrowing Limits: The amount of equity you can borrower against depends on:
- The age of the youngest borrower or spouse
- Current interest rate
- The Appraised value, loan amount limits, or the property sales price
Equity Requirements: There are a variety of Reverse Mortgage programs available with different requirements, but in general you’ll need at least 50% equity available in your home.
We’re here to help. So if you’re not sure if this type of loan is right for you, call us at (888) 273-8734 or schedule a free consultation.
