REVERSE MORTGAGE LOAN

How Do We Qualify For Extra Money by using a

Reverse Mortgage Loan

Homeowners over 62 can use the Cash Proceeds

from a reverse mortgage for:

 Paying off or Consolidating Debt  Everyday Expenses and Emergencies  Replacing Job Income While in Retirement  Providing Family Members Financial Help  Funding Home Improvements  Purchasing a Second Home or Investment Property  Offsetting Medical and Prescription Drug Costs

Understanding Reverse Mortgages: A Guide for Homeowners

A reverse mortgage can be a valuable financial tool for homeowners aged 62 or older who are

looking to supplement their retirement income. It allows you to convert the equity in your home

into cash without having to sell your home or take on a monthly mortgage payment. But how

does a reverse mortgage work, and is it the right option for you? Let’s break it down.

What is a Reverse Mortgage?

A reverse mortgage is a loan that allows homeowners to borrow money against the value of

their home. Unlike a traditional mortgage, you don’t make monthly payments to the lender.

Instead, the loan balance increases over time and is repaid when you sell the home, move out,

or pass away.

The most common type of reverse mortgage is the Home Equity Conversion Mortgage

(HECM), which is backed by the U.S. Federal Government. There are also proprietary reverse

mortgages, which are offered by private lenders and may have different features or

requirements.

How Does a Reverse Mortgage Work?

•

Eligibility: To qualify for a reverse mortgage, you generally must be 62 or older, own your

home outright or have a low mortgage balance, and live in the home as your primary

residence.

•

Loan Amount: The amount you can borrow depends on several factors, including your age,

the value of your home, the interest rates, and the lending limit in your area. Older

homeowners generally qualify for higher loan amounts.

•

Payment Options: You can choose how you want to receive the loan proceeds, such as:

1.

Lump sum

2.

Monthly payments (for a specific period or as long as you live in the home)

3.

Line of credit

4.

A combination of the above

•

Repayment: Unlike traditional mortgages, reverse mortgages don’t require monthly

payments. Instead, the loan is repaid when the borrower sells the home, moves out, or passes

away. If there’s any equity left after the loan is repaid, it goes to the homeowner or their heirs.

Benefits of Reverse Mortgages

1.

Supplement Retirement Income: A reverse mortgage can provide additional cash flow to

cover expenses like healthcare, home maintenance, or daily living costs without having to sell

your home.

2.

No Monthly Payments: You don’t have to worry about making monthly payments, as the

loan is repaid when you sell or move out of the home.

3.

Stay in Your Home: With a reverse mortgage, you can continue living in your home for as

long as you meet the loan requirements (such as paying property taxes and maintaining the

home).

4.

Tax-Free Income: The money you receive from a reverse mortgage is generally not

taxable, as it is considered a loan advance.

Considerations and Potential Risks

While a reverse mortgage can offer financial relief, there are some important factors to keep in

mind:

•

Accumulating Loan Balance: Over time, the amount you owe increases due to interest and

fees. This could mean your heirs might not inherit as much, or in some cases, the sale of the

home may not cover the full loan balance.

•

Impact on Benefits: Reverse mortgage payments could affect your eligibility for government

programs like Medicaid or Supplemental Security Income (SSI), so it’s important to consult with

a financial advisor.

•

Homeownership Responsibilities: You still have to maintain the home, pay property taxes,

and cover homeowner’s insurance. Failing to do so could result in the loan being called due.

Final Thoughts

If you’re looking for ways to leverage the equity in your home and secure financial freedom

during retirement, a reverse mortgage may be a viable solution.

Need Quote and more Information?

Click Here to request a quote and one of our experienced loan officers will contact to guide

you through the process and help you make the best choice for your future.