A Reverse Mortgage is one of the finest programs I have ever been associated with. This is a program designed for our Senior Citizens age 62 and over. This program allows home owners to access the equity they have in their homes. Since only a percentage is tapped, there is always remaining equity. The money received by the homeowner can be used for whatever purpose they choose. The loan is insured by FHA.
There are some misconceptions about the program that I would like to clear up. First and foremost, for our seniors, it is YOUR home, you retain title. The purpose of the loan is so you can live in your home, without mortgage payments, without the stress of making ends meet or wondering how you will cover taxes and insurance on your home at the end of the year. The money can be put in a line of credit that continues to grow at approximately the same rate as the home appreciates, or increases, in value. Money can be accessed at any time, for whatever reason, including the payment of yearly taxes.
The second misconception is payments. The homeowner makes no payments, EVER! The life of the loan is between 70 and 79 years. The only things that would trigger repayment, is when the last homeowner, in the case of a married couple, leaves the home permanently, or the home owners sell the home. The heirs can choose to either refinance the home to repay those monies used, or sell the home. The monies are repaid from the proceeds of the sale. Whatever money that is left from the sale then goes to the heirs.
There are three different ways to take the equity out of the home.
- A Lump Sum payment
- A line of credit
- Monthly payments made to the homeowner
- Any combination of the three
The process is simple, and takes usually less than 30 days to complete. It is rare that it would take longer than this, but if there are lien issues on the title, they would have to be resolved. Homes that are in a revocable trust are eligible for a reverse mortgage. A home in an irrevocable trust won’t work. The peace of mind and quality of life that this program generates is phenomenal. It provides for a stress free life, and enjoyment of day to day activities. It is retirement, on YOUR terms.
