What is a Reverse Mortgage and How Does it Work?

Reverse mortgages are a federally-regulated way of getting a homeowner’s equity in liquid form for senior homeowners. The program is insured by the FHA, and is strictly regulated.
Instead of making mortgage payments, people with a reverse mortgage get a payment sent to them every month. To qualify, you must be at least 62 years of age and have some equity in your home.
 

The best news of all is that you have absolutely no payments as long as you or your spouse lives in the home. Imagine never having to make another mortgage payment while having extra money for your needs and wants. A reverse mortgage can do all that and more.

Tapping into the equity of your home for additional cash is not a new idea. Many people do it for multiple reasons, but most traditional ways of tapping into that valuable equity leave your home vulnerable to foreclosure if you miss any payment. With a reverse mortgage, the homeowner does not make any payments ever again. No one is at risk of foreclosure with a reverse mortgage. Not one penny will ever have to be repaid as long as the home remains the primary residence of you or your spouse. You don’t have to stay there all year long, either. Primary residence means you live there at least 183 days a year.

You and your heirs will still own your home. Payments are made directly to you and continue as long as you live in the home. The lenders do not get your unused equity when you move out. That is reserved for you and your heirs, too.

No income qualifications are placed on this loan, and there are no credit considerations, either. After all, the company will be giving you the money. By now you are probably wondering how much you can qualify to receive. Let’s talk about how that is determined:

First, your age matters. The older you are, the more money you will get.

Second, interest rates are calculated when you take out the loan.

Third, the amount of equity you have in your home will impact the amount you will receive.

Because some lenders raise and lower fees to cover what they are really charging, it is important to use a reputable funding source. No matter how it is packaged, what really matters is how much money you will see in-hand from a reverse mortgage.

Here are some quick facts about reverse mortgages.

 

• All names on the deed must be of people over 62. If a homeowner is under 62, they do not qualify. You can take someone’s name off the title in many circumstances if you so desire.
• There is a limit to the amount insured. As of December 31, 2010, the limit was the highest it has ever been at $625,500.
• Existing mortgages must be paid off with the reverse mortgage funds.
• Proceeds are considered TAX FREE. This is not considered income, so it will not impact your social security.
• You can receive your money in any combination of three common ways.
  • You can take it in a lump sum.
  • You may choose to have a guaranteed payment for as long as you live in the home as your primary residence, even if you live in your residence long past the anticipated amount of time when the reverse mortgage was calculated.
  • You can put the money into a Line-of-Credit (LOC) account. This is the most popular way because interest is not charged against your equity until you take money out. When you want funds, you simply contact the lender servicing your loan and have them wire that money into your checking account. You can request money as many times as you want for any dollar amount up to the amount available. In addition, this amount can go up. You earn the same amount of interest on unused money as you would have paid if you had used it. When the interest rate goes up, your LOC’s value will also go up.
• No income qualifications to apply.
• No credit qualifications.
• Seniors with loans on their homes can apply!

This federally-insured reverse mortgage program is a snap to qualify for, yet it can greatly simplify your life. It is flexible and easy to use.

Call us at 1-800-250-8810 or complete our quick link to find out how much money you could obtain with a simple reverse mortgage!