Homeownership is like the most important investment you’ve made on the road of life.  As you retire and your income needs change, the equity you’ve built in your home over the years can serve as a resource to provide financial security and peace of mind.  Now may be the time to put your home to work for you!

A reverse mortgage allows you to borrow against the equity you’ve established in your home.  Instead of making payments, you can now receive them.  To be eligible, you must be age 62 years or older and own your home free and clear or have a mortgage balance that can be paid off by the reverse mortgage.

With a traditional mortgage or home equity loan, you qualify based on your credit history and debt-to-income ratio.  With a reverse mortgage, your home makes the payments to you and there are no income, employment or credit score qualifying restrictions.

Reverse mortgage proceeds may be used for any purpose including:  eliminating your existing mortgage, meeting daily or monthly expenses, covering healthcare expenses, remodeling or home repairs, reducing credit debt or taking that last dream vacation with your family. 

There are many misconceptions that keep many senior homeowners from looking into the advantages of a reverse mortgage.  Contrary to what you may have heard–as long as all program requirements are met:

• You retain the title to the property and continue to own your home
• Instead of making mortgage payments you can have a mortgage that pays you
• You cannot owe more that the value of the home

Some of the program requirements are things you are already doing like one of the borrowers must continue to live in the home, the taxes and insurance must be curent and the property must be maintained according to FHA standards.

Generally, reverse mortgage loan proceeds are not considered income and will not affect Social Security or Medicare benefits.  However, receiving monthly reverse mortgage advances could affect your eligibility for some public assistance programs that are based on need. Consult your attorney to determine how distributions may impact your particular situation.

To obtain a reverse mortgage, you are required to participate in a consumer education session with a HUD-approved conselor.  Family members and others are welcome to attend with you. 

What are the costs?  Generally, you will be asked to deposit the cost of the appraisal at the time of application, then there are additional closing costs such as origination fee, title insurance, a mortgage insurance premium and attorney fees which can be financed into the loan.  This total cost is around 5% of the loan amount  in my experience.

One common question is “Can the lender take my home away if I outlive my loan term?”  No.  In addition, you do not need to repay the loan as long as you or one of the borrowers continue to live in the house, keep the taxes and insurance up to date and maintain the property.  You may leave the property for up to 12 consecutive months for medical reasons.  After this time, the borrower must be able to return to the home as their primary residence.  If you can not do this, the loan must be repaid. 

Reverse mortgages may be the tool seniors need to extend the time they spend in the home that they worked so hard for and love.  Call me if you would like to get additional information.

This is a good thing…..I only wish I were 62 some days!