Is a Reverse Mortgage a Good Idea? Top 5 Facts You Need to Know

If you or someone you know is over 62 and a homeowner, you have a unique opportunity to get significant, spendable value from your home, even if you still hold an existing mortgage.

Senior homeowners have spent years, often decades, building up equity in their homes. An increasingly common practice of homeowners over the age of 62 is to obtain a reverse mortgage (also known as a HECM, a home equity conversion mortgage), which gives qualified senior homeowners a proven solution to help fund their retirement needs. In addition, and importantly to most independent seniors, a reverse mortgage allows them to live in their home as long as they wish.

As a Member of the Top 5 in Real Estate Network, people often ask me if reverse mortgages are a good option to consider. For some, it can be, but before moving forward, it’s important to fully understand how they work.

Here are five facts you need to know about reverse mortgages:

1. Reverse mortgage candidates must be at least 62 years of age, have significant equity in their property and be looking for a reverse mortgage on their primary residence only.

2. Anyone who intends to apply for a reverse mortgage is required by law to complete a 45-minute counseling session with a HUD (Housing and Urban Development) approved counselor.

3. The sum from a reverse mortgage can be paid to you in a couple of different ways: all at once in a single lump sum of cash; as a regular monthly loan advance; as a credit line that lets you decide how much cash to use and when to use it; or you may have the option to choose a combination of any of these payment plans.

4. The amount of cash you can get from your home’s equity is determined by a number of factors including your age, your home’s value and location, and current interest rates.

5. Reverse mortgages may have tax consequences, could affect eligibility for assistance under Federal and State programs, and may have an impact on the estate and heirs of the homeowner.

If you would like to look into a reverse mortgage for yourself, a friend or a loved one, please e-mail me and I can assess your particular situation to see if it is indeed a good option. Please also forward this article to anyone else you know who may benefit from a reverse mortgage.

 

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