What is a Reverse Mortgage?

For most people, home is more than just “a roof over your head.” It contains a lifetime of memories, is a symbol of independence and adds immensely to the quality of our lives. As we age, however, maintaining and continuing to live independently in that home can present unique challenges that place demands on our resources.

One option available to help meet those financial demands is a Reverse Mortgage. Also known as an FHA Home Equity Conversion Mortgage (HECM), Reverse Mortgages enable homeowners age 62 or older to access a portion of the equity in their home. Received either in a lump sum, a line of credit, a series of monthly payments or a combination of a LOC and monthly payments, the proceeds from a Reverse Mortgage are paid out as a tax free loan (consult your tax advisor) that requires no monthly payments. Borrowers need not repay the loan until the home is sold, they no longer occupy the home as their primary residence or their estate is settled.* At that time, the lender is repaid the existing loan balance, which includes any funds advanced plus interest accrued.

Contributing significantly to homeowners’ peace of mind is the fact that Reverse Mortgages allow them to remain in their homes. They retain full ownership and control as long as property taxes and insurance payments are made and their property is kept in good repair.

Properties eligible for Reverse Mortgages include 1- to 4-unit primary resi­dences, certain condominiums and planned unit developments (PUDs). Homes placed in a living trust or life estate may also qualify. Mobile homes, second homes, investment prop­erties and co-ops are not eligible.

A credit score is not considered when qualifying for a Reverse Mortgage. The amount of equity available to the homeowners is based on the age of the youngest homeowner, the expected interest rate and the market value of the home minus any liens that must be paid off. The Reverse Mortgage process requires receiving counseling from an independent HUD-approved counseling source; and interested borrowers should consult a tax advisor.

For many senior homeowners, day-to-day activities once taken for granted, such as getting in and out of the tub, can become more challenging and may necessitate making changes to improve accessibility, comfort and safety. A major advantage of access to the homes’ equity made possible by Reverse Mortgages is the ability it gives senior homeowners to meet those special needs by making home improvements such as:

* Handrails and grab bars for enhanced safety
* Stair/chair lifts, stepless entryways, wider doors
and hallways, curbless showers, elevated toilets
and lowered cabinets for improved accessibility
* Main floor laundry rooms
* Improved lighting for greater security
* Easy-access kitchen workstations for preparing meals
* Any other home improvements you can think of

*So long as all taxes and insurance are paid and the property is kept in good repair.

For more information on financing for your project, please contact:

MARYLU BYRNES
Reverse Mortgage Specialist
845-206-2526 CELL