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Reverse mortgages were created to help eligible homeowners age 62 and older convert equity into tax-free money. Recent changes to the program have made it a more effective way to achieve greater financial flexibility, while maintaining ownership of their home. You can choose to receive your reverse mortgage proceeds as a lump sum, a line of credit, monthly payments, or a combination of these. Payoff your current mortgage and have no more monthly mortgage payment. As long as you pay property taxes and insurance, the loan balance is not due until the last remaining homeowner, or eligible non-borrowing spouse,
Spouses not yet 62 can now benefit from loan repayment deferral.
Your surviving non-borrowing spouse can too have no mortgage payment for their lifetime.
It’s safe for you and your heirs.
Your loan is federally insured – you or your heirs never have to re-pay more than the loan balance or 95% of the value of the home, whichever is less. And after payoff, any remaining equity is paid to you or your heirs.
Do you have a lot of equity in your home?
Perhaps you would like to convert some of that equity into tax-free cash.
Is the home you’re living in too big, or requires too much upkeep?
Perhaps you want a smaller home, with no stairs, and within walking distance to a shopping center.
You probably didn’t think you could buy a new home. But you can!
With a reverse mortgage, you can do both. Sell your large home and buy a more suitable home for less, while keeping money for special occasions, and emergencies. Traditionally, without sufficient income, you would have to purchase your new home with all cash, quickly depleting your savings. With a reverse mortgage, you would only need cash for about half the purchase price*, financing the rest with a reverse mortgage, and not make another mortgage payment.
For example:
If you have $600K in equity, and want to move into a smaller $500K home. You would sell your current home, cashing out your $600K**. You would use about $250K of that $600K for the purchase of your new home and finance the other $250K with a reverse mortgage. You would have about $350K left in cash***, and no mortgage payments.
However you come up with the 50%* down payment, you could buy your new home with a reverse mortgage, and enjoy all its benefits.
To discuss your options, contact Jacqueline Averill, Reverse Mortgage Specialist.
* Down payment amount required / amount financed depends on appraised home value, your age, and the loan options you choose.
** There are fees and costs associated with selling your home, not yet factored in.
*** This material is not from HUD or FHA and has not been approved by HUD or a government agency.