Are you a senior homeowner (at least 62 years old) who has built up equity in your home but don’t know how to access it without selling and moving? A reverse mortgage may be the perfect solution for extra income or extra cash in your pocket!
What is a Reverse Mortgage?
A reverse mortgage allows you to convert a portion of your home equity into cash, which you can use to supplement your retirement income or pay for various expenses. The loan is called a "reverse" mortgage because instead of making monthly payments to a lender, the lender pays you. And the best part? You still retain ownership of your home and can pass it on to your heirs.
Reverse Mortgage Benefits
Here are some of the benefits of a reverse mortgage:
- Supplement your retirement income: Use the money from your reverse mortgage to pay for everyday expenses, travel, or any other way you choose.
- No monthly mortgage payments: You don't have to make monthly payments on a reverse mortgage. Instead, the loan is paid back when you sell the home or no longer live in the property.
- No credit or income requirements: Unlike a traditional mortgage, you don't need a good credit score or a steady income to qualify for a reverse mortgage.
- Retain ownership of your home: With a reverse mortgage, you keep ownership of your home and can pass it on to your heirs.
- Equity taken out is tax free.
So why wait? If you're a homeowner looking for a way to supplement your retirement income and make the most of your hard-earned equity, a reverse mortgage may be the solution you've been looking for. Contact us today to learn more!
Reverse Mortgage FAQs
If you own a home, you might be wondering about your reverse mortgage options.
- Do you have to be a certain age for a reverse mortgage?
- What happens when I die, or my spouse dies?
- How can I use the money from a reverse mortgage?
- Why can’t I access all my equity immediately?
These questions are common for many homeowners. Check out our answers to reverse mortgage frequently asked questions to learn more.
What is a reverse mortgage?
A reverse mortgage is a type of loan available to homeowners aged 62 or older that allows them to convert a portion of their home’s equity into cash. Instead of making monthly mortgage payments, the loan is repaid when the borrower sells the home, moves out, or passes away. By facilitating a flexible and accommodating approach, reverse mortgages can empower senior homeowners to unlock the value of their home and supplement their monthly finances, without having to meet standard mortgage loan criteria requirements, which are often far more stringent than reverse mortgage requirements.
Is there an age limit for a reverse mortgage?
There is a minimum age requirement for a reverse mortgage. Specifically, one of the homeowners must be at least 62 years old. This means that homeowners who have reached the age of 62 or older are eligible to apply for a reverse mortgage. This requirement is set by the Department of Housing and Urban Development (HUD)* and is a standard rule across the industry. The age restriction is designed to ensure that the product is used as a long-term financial solution for seniors, helping to supplement their retirement income.
How do I qualify for a reverse mortgage?
To qualify for a reverse mortgage, there are several key requirements that need to be met. First, you must be at least 62 years of age. Second, you must have equity in your home; in fact, the more equity you have, the more you can potentially borrow. The property in question must also be your primary residence. There are other requirements, such as keeping the home well-maintained and staying current on property taxes and homeowner's insurance payments. If you're considering a reverse mortgage, it would be wise to consult with a reverse mortgage professional to understand all the qualifications necessary.
Do I need to own my home outright to qualify for a reverse mortgage?
No, you don't need to own your home outright to qualify for a reverse mortgage. However, you must have equity in your home to be eligible. Reverse mortgages allow homeowners to convert a portion of their home equity into loan proceeds, which can be received as a lump sum, monthly payments, or a line of credit.
Can I use the money from a reverse mortgage for anything I want?
You can use the money from a reverse mortgage for virtually anything you desire. It is your money; drawn from the equity you've built up in your home over the years. Common uses for a reverse mortgage payout include supplementing retirement income, making necessary home improvements, funding in-home care, or even just enjoying a more comfortable retirement. Some people also use the funds to pay off existing debts, travel, or help family members. In some cases, you could even use the money from your reverse mortgage to purchase another home, although this would typically require a specific type of reverse mortgage known as a Home Equity Conversion Mortgage for Purchase (HECM for Purchase).
Can I have a reverse mortgage on a second home or investment property?
No, you cannot have a reverse mortgage on a second home or investment property. A key requirement for a reverse mortgage is that the home must be your primary residence. This is because the reverse mortgage is intended to help seniors stay in their homes by tapping into the home's equity. If the property is not your primary residence—such as a second home or an investment property—it does not qualify for a reverse mortgage. This rule helps to prevent misuse of the product and ensures that it serves its intended purpose—to provide financial support for seniors in their primary residence.
What are the costs associated with a reverse mortgage?
Reverse mortgages come with various costs, and it is important to factor these costs into your decision making. Typical costs associated with a reverse mortgage include:
- Origination fees
- Closing costs
- Mortgage insurance premiums
- Interest charges
It's important to carefully review and understand these costs before proceeding with a reverse mortgage. The better you understand the associated costs the more informed you will be when you decide on the reverse mortgage that is right for you.
*Reverse Mortgages are neither “endorsed” nor “approved” by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. It is strongly advised that you consult with your family and / or trusted financial planner when considering any reverse mortgage loan.
These are brokered loan products. Not available in the state of NC. All credit decisions for brokered loan products will be made by the third-party lender. Restrictions and limitations apply. You must still live in the home as your primary residence, continue to pay required property taxes, homeowners’ insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure. As required by FHA, you will be charged an up-front mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP based on the loan balance. Your current mortgage, if any, must be paid off using proceeds from your reverse mortgage loan. If your home needs repairs to be eligible for a reverse mortgage loan, you may be able to use the proceeds of the loan to accomplish this. Generally, the money received is not considered income and could be tax free, please consult your tax advisor and appropriate government agencies for any effect on taxes or government benefits.
